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World Bank UP Electricity Case Study World Bank UP Electricity Case Study

Mini grids in Uttar Pradesh : a case study of a success story

Uttar Pradesh, the most populous state in India, has among the lowest levels of electricity connection in the country.1 Over 100 million people, at least half of the rural population, lack a formal connection to a distribution grid. The level of electricity services remains low despite the physical extension of the state-owned grid to all official villages. Unelectrified households are reluctant to apply for grid connection because they expect electricity supply to be unreliable, and they would have to spend money on coping strategies to replace electricity. In addition, connecting individual households in each village is costly to the state-owned distribution utilities. Highly regulated tariffs and a high cost of servicing remote areas mean that rural connections promise few returns to the utilities.Electrification has been a public policy priority for decades of successive state and central governments across the political spectrum. Public policy has maintained ambitious objectives to expand grid services from the state-owned medium-voltage (MV) distribution grid to rural areas. The state-owned grid has electrified all cities and surrounding towns. The high-voltage (HV) transmission grid extends throughout most of the state, in contrast to other energy-poor countries in Asia such as Cambodia, Indonesia, and Sri Lanka. Private mini grid operators have occupied a small but growing space in the rural electricity market in Uttar Pradesh since around 2010. Several small companies, as well as individual entrepreneurs, are now providing electricity services in almost 1,900 settlements (villages and hamlets) in the state, and have made about 37,000 connections (and growing)Independent mini grid operators in Uttar Pradesh have proven they can earn rural customers’ trust and their business. Rural consumers’ simple energy needs can absorb up to a third of households’ monthly expenditure without an electricity connection.Mini grid operators are addressing these gaps in service through renewable-based systems that deliver power to underserved villages. They have gained credibility as a more reliable service than the state-owned grid in rural areas by providing a reliable solution to residents’ and businesses’ lighting, phone charging, and appliance-powering problems. They provide basic light-emitting diode (LED) home lighting and a mobile phone charging outlet to a household for a scheduled 6 to 8 hours a day