Engaging with India’s Electrification Agenda: Powering Madhya Pradesh
- Madhya Pradesh has raised the rate of electricity access from 68.9 percent in 2015 to 100 percent in 2019 through a combination of state and central government efforts.
- Although Madhya Pradesh sought to reduce its technical and commercial losses, they have increased from 23 percent to 32 percent since 2015.
- Madhya Pradesh has worked to make power more affordable for its most vulnerable populations while simultaneously deploying solar power across the state.
- Now that it has connected all its households to power, the state is seeking to improve the quality of power and make solar-powered pumps available for irrigation and to provide greater access to drinking water.
- There are a number of opportunities for international partners to assist Madhya Pradesh in addressing its priorities, including studying the integration of renewable energy, exploring small-scale hydropower, and helping cover the costs of floating solar.
Madhya Pradesh, India’s second largest state by area, is seeking to build a reputation as one of the country’s most dynamic states despite the serious challenges presented by a poor, largely agrarian and rural population. Fifteen years of stable government until November 2018 allowed the continuous buildout of infrastructure, improving transportation and providing electricity to remote corners of the state. As the largest producer of agricultural products in the country, the state seeks to add value to this sector by building out its agribusiness and food processing industries. This presents an opportunity for stakeholders wishing to provide critical clean energy access services to help power agro-processing and logistics.
Madhya Pradesh has increased the share of its population with electricity access from 68.9 percent in 2015 to 100 percent in 2019. An important measure of the health of the state’s electric power sector is aggregate technical and commercial losses (AT&C), which measure line losses from transmission and distribution equipment, power theft, billing and collection inefficiencies, and customers’ inability to pay. The average AT&C losses for Madhya Pradesh’s utilities in 2015 were 23.07 percent. Under the state’s 24x7 Power for All plan formed with the central government, the state’s utilities would target average AT&C losses of 17 percent in 2019. Unfortunately, losses have increased—as of August 2019, they are at 31.9 percent.
Under the central government’s Ujwal Discom Assurance Yojana (UDAY) scheme, which aims to improve the financial health of the country’s utilities, Madhya Pradesh has a target of 776,487 smart meters for customers with monthly consumption between 200-500 kilowatt-hours (kWh by December 2019. As of August 2019, the state has deployed 75,457 smart meters for these customers, 10 percent of its goal. The state also had a target to deploy 295,644 smart meters for customers with monthly consumption over 500 kWh by December 2017, but to date has only deployed 67,275 smart meters, 23 percent of its goal.
Figure 1: Electrification (% of population)
Figure 2: Aggregate Technical & Commercial Losses
Figure 3: Smart Meter Deployment, August 2019
Figure 4: Solar Deployment, July 2019
Madhya Pradesh has a target to install 5,675 megawatts (MW) of solar power in the state to contribute to the central government’s target of 100 gigawatts (GW) by 2022. As of July 2019, data from the Ministry of New and Renewable Energy indicate it has installed 2,100.76 MW, about 37 percent of its goal.
Power Sector Reforms Undertaken
In the past few years, Madhya Pradesh has focused on making power easier for customers to afford and on deploying solar power—especially rooftop solar.
Madhya Pradesh has undertaken several reforms over the past few years to make it easier for customers, especially vulnerable populations, to afford power. In June 2018—leading up to an election—the state government announced two new schemes aimed at providing power to unorganized labor: one that would set a rate ceiling for Rs. 200 ($2.80) per month for unorganized laborers’ electricity and another that would waive electricity dues and surcharges for a year for unorganized laborers and those below the poverty line. In February 2019, the government considered capping the subsidy at 100 kWh per month and requiring recipients to pay the normal rate above 100 kWh, but then reversed its decision. In August 2019, the government announced it would provide power to all customers using less than 150 kWh per month at Rs. 100 ($1.40) for the first 100 kWh and charging prevailing rates for the next 50 kWh.
The state has also focused heavily on solar power over the past few years. Some decisions have involved purchasing solar power from other entities. In June 2018, for example, the state’s power management company signed a power purchase agreement with the central government-run Solar Energy Corporation of India (SECI) for 500 MW at Rs. 2.59 ($0.036) per kWh. Mostly, however, the state has focused on building solar projects in its boundaries. By refining the structural process for how they design tenders through thorough stakeholder consultation in advance and tapping strategic funds for viability gap funding needs, Madhya Pradesh has achieved rock bottom auction bids that no other Indian state has achieved. The state’s renewable energy development agency MPUVNL and central government-run SECI began operations at the 750 MW Rewa Solar Power Project and the central government-run NTPC opened the 250 MW Suwasra Solar Power Plant in July 2018. MPUVNL tendered 33 MW of solar on 567 rooftops in August 2018, which received bids as low as Rs. 1.58 per kWh ($0.022), which was a record low bid for the country at the time. In October 2018, an 8.6 MW tender received bids as low as Rs. 1.38 ($0.019) per kWh. That same month, Rewa Ultra Mega Solar Limited, the central-state joint venture that built the 750 MW plant in July 2018, announced a 1,500 MW tender for utility-scale projects at three sites across the state. In April 2019, MPUVNL floated another 25 MW tender for rooftop solar on industrial sites, which it increased to 32 MW in June.
To follow the reforms and initiatives in Madhya Pradesh’s power sector, please visit: https://indianstates.csis.org/states/madhya-pradesh/.
In September 2017, Prime Minister Modi announced the Saubhagya Scheme, an ambitious effort to provide electricity to the 40 million households who still lacked access. The government announced the completion of the initiative in early 2019. Now that Madhya Pradesh has connected 100 percent of its population to power, it is important to improve the quality of that power. There are concerns that the quality of power is affecting the performance of lightbulbs and appliances. The state has undertaken some efforts to address this—for example, installing solar panels toward the end of the distribution grid at the 33/11 kilovolt level to boost voltage. Another major focus for Madhya Pradesh has been installing off-grid, solar pumps across the state. As of March 2019, Madhya Pradesh deployed 14,000 irrigation pumps for farmers, 2,300 drinking water pumps for communities, 400 drinking water pumps for animals, and 600 drinking water pumps in remote areas. Outside of pumps, some stakeholders have indicated that the market for new deployments of off-grid technologies such as solar home systems is limited because grid electricity is available and relatively reliable in Madhya Pradesh. It is important to note, however, that some households currently use off-grid systems, so there is an existing consumer base that may require servicing, maintenance, or replacement in the future. State officials and utilities have expressed interest in energy storage to help guarantee more reliable power and help integrate all the new solar power being added to the system.
Opportunities for Partnership
- State officials have expressed an interest in a state-specific study on the integration of renewable energy. This is a topic that U.S. government agencies are helping to study at the national level, but additional international partners could help Madhya Pradesh with a state-level study.
- The central government has evaluated potential sites for small-scale hydropower installations. Madhya Pradesh has the fourth largest number of potential sites in the country and the greatest number among the five states in this series, with 211 potential sites. This presents a potential opportunity for international partners interested in developing small-scale hydropower in Madhya Pradesh.
- Another opportunity in deploying energy technologies is in floating solar. Bhopal, the capital of Madhya Pradesh, has many natural and man-made bodies of water, earning it the nickname the City of Lakes. The state is interested in floating solar but estimates there is a price premium of around 10 percent over ground-mounted solar. This presents an opportunity for viability gap funding to make up the additional 10 percent and help deploy more solar power in the state.
- With interest from state officials and utilities in deploying energy storage on the grid, there is an opportunity for energy storage companies to introduce their products into the market in Madhya Pradesh and lend expertise to officials interested in learning how to best use batteries to improve the health of the grid.
- A state official proposed that the cost of a solar installation should be included in the cost of a new house, and a loan should be made available to the buyer. This regulatory reform could connect with real estate laws and help speed up deployment of rooftop solar. This presents an opportunity for partners who could help draft a regulation as well as solar developers and real estate developers who could work with the Department of Urban Development to run a pilot program testing the idea.
Stephen Naimoli is a research associate in the Energy and National Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Dr. Kartikeya Singh is a senior fellow and deputy director of the Wadhwani Chair in U.S.-India Policy Studies and senior fellow of the Energy and National Security Program at CSIS.
For more information on how to engage with this process please contact the secretariat of the U.S.-India State and Urban Initiative (IndianStates@csis.org).
The Initiative was made possible with generous support from the Bureau of Energy Resources of the U.S. Department of State and the William and Flora Hewlett Foundation. This brief is part of the Saubhagya Partnership Project, an offshoot of the U.S.-India State and Urban Initiative, supported by the Good Energies Foundation.
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