Impacts of electrification with renewable energies on Local Economies: The case of India

For India, it is crucial to promote rural electrification to raise the well-being of the people since electrification provides a wide range of opportunities for people to change the social, economic, and environmental aspects of their lives for the better. In its rural areas, which have a larger number of households and higher populations than its urban areas, two types of electrification are in progress. One is electrification by connecting to the conventional grid. The other is electrification with renewable energies such as solar, biomass, hydro, and so on. Many studies show positive socio-economic impacts of electrification with renewable energies in rural areas of developing countries including India. However, are there any significant socio-economic impacts of the electrification with renewable energies? This study is particularly interested in its impacts on local economies such as the creation of new businesses and jobs, agricultural and other productive activities, and household income. The study investigated quantitatively and qualitatively the impacts of two types of electrification on local economies for comparison by conducting the interview survey in two grid connected villages and also two solar mini-grid villages in Sundarbans, State of West Bengal, India, and then compared those results from two types of villages in terms of electrification technologies used to identify significant characteristics in the impacts on local economies in solar mini-grid villages compared to grid connected villages. The study found that: first the share of the households whose primary occupation is small business is significantly larger in solar mini-grid villages than in grid connected villages; second the use of electricity is not allowed for agriculture in solar mini-grid villages because of the limited capacity of solar power plants; and third the increase of household income after electrification is significant both in solar mini-grid villages and in grid connected villages. However, further study is necessary to ascertain whether these impacts on local economies in sample solar mini-grid villages can be generally found in rural electrification with renewable energies. The study also found that while the share of households without access to electricity even after their village was electrified is much larger in solar mini-grid villages than grid connected villages, most of these unelectrified households in the solar mini-grid villages have been covered through solar home systems. The study concludes that solar energy is also able to provide the required energy for development of the local economy in the form of markets, powering the schools, health centers, etc. Thus, it could be an alternative means of electrification that compliments grid electrification to enhance the rural electrification in the developing countries rich with solar resources.