The adoption and use of solar mini-grids in grid-electrified Indian villages

Across diverse geographies, mini-grids have been employed to provide energy access to off-grid and rural communities. In India, amid the government push to expand grid infrastructure, concerns have been raised about the viability of mini-grid business models that are largely run by private companies. While the role of mini-grids in previously un-electrified areas has been studied extensively, there exists limited empirical evidence regarding their uptake in grid-connected regions. In this paper, we analyze adoption and use of mini-grids among rural communities living in grid-electrified villages. The findings are based on the primary data of 2648 households and 544 non-farm enterprises from 54 villages in the states of Uttar Pradesh and Bihar in India. Our results suggest that despite the presence of central-grid infrastructure, users adopt mini-grid in regions which lack reliable power supply. The mini-grid uptake was found to be relatively higher among non-farm enterprises, which, unlike households, have not received adequate policy attention and support. However, mini-grids were being used only for meeting basic lighting and cooling loads in most cases, primarily due to affordability concerns. Based on our findings, we argue that grid-interactive mini-grids could be used to serve rural enterprises as they value reliable power supply. Yet, the current low levels of electricity demand among non-farm rural enterprises suggest that growth in electricity demand and in turn enterprise productivity would require complementary services and infrastructure.