Ecology, Economy and Society–the INSEE Journal 4 (2): 65-93, July 2021

RESEARCH PAPER

Solar Microgrids in Rural India: A Case Study of

Household Benefits
Debalina Chakravarty1 and Joyashree Roy2
Abstract: This study evaluates the benefits that rural households in India derive
from dedicated solar microgrid service systems. A case study was conducted in
Lakshmipura-Jharla, Rajasthan, a village in western India with significant potential
for producing solar energy. In 2013, a private investor set up a solar microgrid in
the village and distributed energy-efficient appliances. Its goal was to give poor
households access to modern energy services. The study data were collected
through a survey conducted among randomly selected households in the village.
The survey found that such an electricity provision service had multidimensional
benefits: flexible use of the energy service, more effective time allocation among
women, more study time for students, improved indoor air quality, and safer public
places. Given the initial unmet demand for modern energy in the village,
technological interventions supported by policy has helped to expand consumption
possibilities and new demand for services has emerged. The household-level
frontier rebound effect is estimated to be more than 100%, reflecting a one-and-a-
half times increase in the demand for illumination services among rural households.
Frontier rebound effect estimates help quantify the benefits of solar microgrids and
energy-efficient appliances for households in rural areas. The results of this study
are consistent with existing literature that suggests that efficient appliances and

1 Assistant Professor in Economics, Faculty of Arts and Social Studies, St. Xavier’s
University, Action Area III, Newtown, Kolkata, West Bengal – 700160;
[email protected], [email protected]
2 Bangabandhu Chair Professor, Asian Institute of Technology, 58M009 Paholyothin

Highway Rd, Khlong Nueng, Khlong Luang District, Pathum Thani-12120, Thailand; and
Professor of Economics (on lien) and Founder Advisor - Global Change Programme,
Jadavpur University, 118 Raja S.C. Mallik Road, Jadavpur, Kolkata, West Bengal-
700032; [email protected], [email protected].
Copyright © Chakravarty and Roy 2021. Released under Creative Commons Attribution-
NonCommercial 4.0 International licence (CC BY-NC 4.0) by the author.
Published by Indian Society for Ecological Economics (INSEE), c/o Institute of Economic
Growth, University Enclave, North Campus, Delhi 110007.
ISSN: 2581-6152 (print); 2581-6101 (web).
DOI: https://doi.org/10.37773/ees.v4i2.140
 Ecology, Economy and Society–the INSEE Journal [66]

access to electricity will increase the energy demand manifold and satisfy the
growing and largely unmet demand for energy.
Keywords: Modern Energy Services; Energy-efficient Appliances; Frontier
Rebound Effect; Rural Household; Solar Microgrid.

1. INTRODUCTION
The Indian government has implemented several initiatives to promote and
accelerate the scaling up of rural electrification and efficient appliances use
through new institutional arrangements and policy support. Solar
microgrids are considered an alternative service delivery model to grid
electricity in remote villages that either do not have grid connectivity
(Thirumurthy et al. 2012; World Bank 2008) or where it is neither feasible
nor cost-effective. While on an average grid electricity is less expensive than
off-grid options, the levelised cost per kWh of grid extension rises steeply
beyond a certain distance from the central facility (World Bank 2010;
Bruckner et al. 2014). Therefore, microgrids are seen as a cost-effective
solution for rural electrification in India (Venkataraman and Marnay 2008).
It is important to scrutinize past experiments for lessons that may help us
better understand which policy interventions will aid the speedy
advancement of such initiatives and boost the demand for such electricity
among rural households. This can help us assess the microgrid capacity
required and how quickly supporting infrastructure needs to be built. The
first mention of solar microgrids at the policy level in India can be found in
the Decentralised Distributed Generation (DDG) scheme proposed by the
Ministry of Power as part of the Rajiv Gandhi Grameen Vidyutikaran
Yojana (RGGVY), 2005. This programme’s goal was to electrify villages
where grid connectivity is neither feasible nor cost-effective and to
supplement power provision in areas where the grid supply is available for
less than six hours a day. In 2014, rural electrification gained momentum
with Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and the
Integrated Power Development Scheme (IPDS), which emphasized solar
energy and introduced a smart metering system to enhance end-user access.
In addition, the Indian government also designed a policy instrument for
subsidy allocations to encourage private investors to enter the electric
services market through private microgrid systems in rural areas. A
microgrid is an integrated, local system that generates electricity and
transmits it to end-users (residential and commercial users) within a limited
geographical region. A microgrid operating on renewables like biomass,
wind, and solar photovoltaic (PV) technology can help increase power
quality, reliability, efficiency, and sustainability (Kaundinya et al. 2009). The
[67] Debalina Chakravarty and Joyashree Roy

argument in favour of renewable energy-based microgrids and energy-

efficient appliances is mostly driven by the scarcity of non-renewable fossil
fuel–based energy and its impact on human health and climate change.
Microgrid systems also provide more reliable electricity, as outages or
interruptions in supply can be quickly identified and corrected. Additionally,
transmission and distribution costs are low with microgrids and very little
electricity is lost during transmission (Hirsch et al. 2018).
In India, a large number of rural households without access to grid
electricity or any other reliable energy source depend on firewood or fossil
fuels to meet basic energy needs like cooking and illumination. The
detrimental health and environmental impacts of these fuels are well known
(Johnson and Chiang 2015; Parikh 2011). Therefore, reliable access to
cleaner energy sources is crucial in terms of the environment and climate
change mitigation (Millward-Hopkins et al. 2020; World Bank 2008; GEA
2012; Alliance for Rural Electrification 2011); in addition, it stands to
contribute towards meeting multiple Sustainable Development Goals
(SDGs) by improving households’ health and quality of life (UNEP 2017).
However, it is difficult to estimate the level, pattern, and growth of total
energy demand at the community scale. This makes it difficult for private
companies to invest in microgrids (Williams et al. 2015; Wang and Huang
2014). Therefore, to plan and design better solar microgrids, it is essential to
understand the demand for such grids and how they benefit users and the
community.
Contemporary literature on energy demand indicates that when a certain
energy service becomes more technically efficient, energy demand in total
increases and not just for that particular energy service. This is called the
“rebound effect” (Chakravarty et al. 2013; Sorrell and Dimitropoulos 2008;
Vikstrom 2008; Greening et al. 2000; Saunders 2000; Roy 2000). This
happens because users interpret energy efficiency increases as the increased
availability of energy services at the same price; in other words, as the
effective prices of energy services reduce, consumers respond by
demanding more of that energy service. The literature suggests that the
rebound effect can be partial or full or may backfire (Roy 2000; Roy et al.
2013; Lin and Liu 2013a; Lin and Liu 2013b; Lin and Liu 2015; Druckman
2011; Saunders 2000; Sorrell 2009). But these outcomes are dependent on
whether the demand increase is relatively lesser, equal to, or greater than the
magnitude of energy efficiency improvement.
The frontier rebound effect is a special case that the literature describes as
an increase in the total energy demand due to improved efficiency as a
result of a technological innovation within a particular energy service—such
as in the case of fuel-efficient cars in mobility services or LED bulbs in
 Ecology, Economy and Society–the INSEE Journal [68]

illumination services (Jenkins et al. 2011; Saunders 2013). The literature also
shows, through empirical studies, that when one energy service becomes
cheaper and more easily available, consumers devise new and innovative
ways to use that energy (Saunders and Tsao 2012), which leads to an
increase in the total energy demand. This is an extreme case of the rebound
effect caused by the increased availability of opportunities for energy
consumption and discovery of unforeseen opportunities for substitution.
This increased consumption can have a significant impact on economic
activities. This phenomenon is often seen in developing countries with
constrained energy access and a lot of unmet demand (Roy 2000;
Chakravarty et al. 2013). The presence of such an effect indicates that unmet
demand falls faster with an increase in the social well-being of the
beneficiary (Saunders 2013; Freeman 2018).
This case study explores solar microgrids as an alternative electricity service
provision system in human settlements with high unmet demand. The study
also examines the role of energy-efficient appliances in such environments.
The case study was based on the village Lakshmipura-Jharla in India, where
a single solar microgrid system was set up by a private investor. The details
of the study are covered in Section 2. Section 3 discusses the estimated
frontier rebound effect based on the available data. Section 4 presents a
discussion of the results, and Section 5 provides concluding remarks.
2. THE CASE STUDY SITE
The first commercial-scale solar microgrid (and energy-efficient appliances
programme) was set up in 2012–2013 as a private–public partnership (PPP).
Gram Power (a private solar microgrid company based in India) set up its
pilot project in the village Lakshmipura-Jharla in the Tonk district of
Rajasthan, which was unconnected to the grid. High levels of solar
irradiance3 made it an apt location for the project, and in March 2012, a
microgrid with a capacity of 2kW was set up. One of the authors visited the
village in July 2013. The study site is located 1 km from the relatively well-
connected village of Khareda, which, in turn, is located 150 km from
Rajasthan’s capital city, Jaipur.
In 2003–2004, a start-up introduced the ‘jugnu’ system, wherein individual
solar lanterns were distributed to village households at the subsidized price
of ₹7,000 ($111)4 per unit. However, these lanterns could only provide four

3 Solarirradiance is a measure of the solar radiation (power per unit area on the earth’s
surface) produced by the sun in the form of electromagnetic radiation (IPCC 2007).
4All conversion in this study is calculated using the exchange rate: USD 1 = INR 63 (average

exchange rate for the year 2013).

[69] Debalina Chakravarty and Joyashree Roy

hours of light a day, leading to high unmet demand. Then, in 2012, a private
company set up a solar microgrid in the village and provided households
with smart meters that allowed them to access 24x7 uninterrupted
electricity supply. They also provided households with two energy-efficient
14 W or 16 W compact fluorescent lamp (CFL) bulbs. At the time, the cost
of a bulb was around ₹70 when bought in bulk. The bulbs were distributed
at a subsidized price of ₹15 per bulb as per the Bachat Lamp Yojana (2012)
to microgrid-connected households. The private company installed and
operated the microgrid in collaboration with the state renewable energy
board under the Ministry of Power and the Development Impact Lab
(DIL), University of California, Berkeley, USA, provided scientific
knowledge. Private investors provided 80% of the total cost of installation
in return for import duty exemption for certain components in the system.
The remaining 20% was contributed by the Indian government under the
Jawaharlal National Solar Mission (2010). The objective of the PPP model
was to leverage private investment to expand the supply capacity and meet
new energy demand through renewable sources such as solar (World Bank
2008; GEA 2012; Alliance for Rural Electrification 2011; UNEP 2017)
(Table 1).
Unlike solar lantern systems that are meant for use within the home,
microgrids provide uninterrupted power service 24x7 at a community level.
The latter provides flexibility to end-users in their choice of appliances and
has better social, environmental, and economic benefits compared to
lanterns while reducing costs by utilizing economies of scale (Table 1).
Despite these well-established benefits, there exist some practical barriers to
solar microgrids—for example, the poor availability of skilled technicians,
lack of timely maintenance and monitoring, etc. (Fowlie et al. 2018). In our
case study, we found that the private partner was committed to overcoming
these known barriers.
 Ecology, Economy and Society–the INSEE Journal [70]

Table 1: Solar Microgrid Systems: Benefits and Barriers

Benefits and barriers

Producer Reference
& s
Actors End-user Other
distribut
or
Low cost
Local
of raw Dieckman
Planned employment
energy, n 2013;
Economic electricity generation,
reduces Chen et al.
consumption economic
transmissi 2011
development
on loss
Improvement
s in health, Fowlie et
study time, al. 2018;
Social
cooking time, World
communal Bank 2008
activities, etc.
Benefits
Dieckman
n 2013;
Kamel et
al. 2015;
Less greenhouse gas (GHG) emissions, less Molina
Environme local pollution, less non-renewable energy and
ntal use Mercado
2010;
Vachirasri
cirikul and
Ngamroo
2011
Lack of
improved
technolog
ies, CEA
Higher
efficient Regulatory 2012;
Barriers electricity
monitori barriers Chakravart
tariffs
ng y 2016
systems,
and
expertise
Source: Compiled by authors from various sources
[71] Debalina Chakravarty and Joyashree Roy

3. END-USER BENEFITS OF THE SOLAR MICRO-GRID:

ESTIMATION OF THE FRONTIER REBOUND EFFECT
Estimating the frontier rebound effect can show how an increase in the
efficiency of any appliance changes end-user behaviour and affects their
total energy consumption (Chakravarty et al. 2013; Sorrell and
Dimitropoulos 2008; Vikstrom 2008; Herring 1998, 2006; Greening et al.
2000). Khazzoom first mentioned this effect in the early 1980s when
discussing household energy consumption (Wei 2010; Sorrell 2007; Allan et
al. 2008; Allan et al. 2006; Herring 2006; Saunders 2000a; Khazzoom 1980).
The literature shows that end-users respond in the same way to energy
efficiency as they do to a decrease in energy prices (Sorrell and
Dimitropoulos 2008). Therefore, the rebound effect is equivalent to the
percentage change in the demand for energy services, i.e., the perceived
reduction in price due to efficiency improvements in energy-using
appliances (Berkhout et al. 2000; Sorrell 2007; Saunders 2005; Sorrell and
Dimitropoulos 2008; Frondel et al. 2008; Binswanger 2001). The change in
energy service demand due to a change in perceived price can be greater
than 100% in magnitude, which is identified as the frontier rebound effect.
Energy efficiency gains create opportunities for undertaking new economic
activities using the same supply of appliances. In parallel, the demand goes
up for new energy-embedded products (Jenkins et al. 2011; Saunders 2013).
For example, Tsao et al. (2010) analysed 300 years’ worth of historical data
about lighting appliances and fuel-use from three continents and discovered
that despite advances in appliances and fuel-use efficiency, energy
consumption has been increasing.
Evidence from past studies in India shows a widely varying rebound effect
(Roy 2000; Roy et al. 2013; Chakravarty and Roy 2017). There was super-
conservation or a negative rebound among sufficiently conscious urban
consumers (Chakravarty and Roy 2017); however, “backfire” (Roy 2000;
Roy et al. 2013) was more likely in households with unmet energy demand.
Sorrell (2007; 2009) observed that backfire due to the frontier rebound
effect is most likely to occur with general-purpose technologies as they
usually have a wide scope for improvement and elaboration. These general-
purpose technologies complement existing and potential new technologies,
particularly when energy efficiency gains can be made at an early stage in
the development and diffusion of the technology. The opportunities created
by these technologies can have significant, long-term effects on innovation,
productivity, and economic growth; the subsequent increase in economy-
wide energy consumption further increases these effects.
To understand the frontier rebound effect of the microgrid system, we
compared the benefits accrued to households from solar microgrids against
 Ecology, Economy and Society–the INSEE Journal [72]

a benchmark situation, i.e., households’ illumination consumption via

domestic solar lantern systems. To estimate the frontier rebound, we used
the following equation (1) (Roy 2000; Saunders 2012, 2013; Freeman 2018):

Where, q represents energy service consumption and p represents the price

(implicit) of the energy service.
Specifically,
Where, is the energy service consumption at the current time point and
is the energy service consumption at the base time point.
Again,
Where, is the energy service consumption at the current time point and
is the energy service consumption at the base time point.
The rebound was estimated for the illumination service as in this case study
efficient appliances were introduced for lighting purposes only. The impact
of electricity access could be estimated as the frontier rebound effect using
equation (1). Thus, we were able to estimate the total increase in energy
service demand resulting from the energy access intervention by comparing
the pre-microgrid and post-microgrid situation. In the rebound estimation,
the price mentioned in equation (1) represents the estimated price per
particular “service” (e.g., illumination/cooking/heating). To estimate these
prices per service, we used service-specific expenditure data. We also
estimated the expenditure both before and after the introduction of the
solar microgrid. We estimated the cost of a domestic solar lantern system
using annualized monetary expenditures (E(q)) divided by the quantity of
consumption (q) (Filippini and Pachauri 2004). E(q) is the total annualized
cost of consumption derived from the capital cost and operating cost
(including maintenance) borne by households. Capital cost includes
investment and interest charges. To estimate what part of the unit cost can
be attributed to capital investment, we used the method suggested by Culp
(1979).5

Here,
(*)
[73] Debalina Chakravarty and Joyashree Roy

Data were collected from users who owned domestic solar lantern systems.
The solar microgrid expenditure and energy consumption data were directly
collected from the energy meters and payment receipts. The number of
households and the names of the heads of households were first collected
from the village panchayat office; then, every alternate house from the
village was selected for the survey. If the selected house was vacant, or its
members were unavailable or unwilling to participate in the survey, the next
house was selected. Each household was given the option of exiting the
survey at any time to minimize bias and erroneous responses. In conducting
the survey, standard survey ethics were followed. Consent was taken from
each of the stakeholders (the educational institute based in the US, private
start-up, households) before the purpose of the study was explained.6
A key aspect of the survey was collecting data on the energy service demand
pattern of households before and after they had access to the solar
microgrid and efficient lamps, and how these corresponded to their energy
bills. Both types of information were collected through direct interviews
based on a pre-formatted, tested, and piloted questionnaire. Since the
appliance usage patterns of households influence electricity demand, the
technical specifications of the appliances were very important in this study.
Therefore, the questionnaire7 also collected information about the types of
appliances used in households, the number of appliances, their
specifications, wattage consumption, usage time in both summer and
winter, whether they were energy-efficient or not, and their initial cost.
Apart from this, the questionnaire also had qualitative questions on how
households perceived the impact of electrification.

4. RESULTS AND DISCUSSION

The total population in the study village was approximately 100 people
living in 22 households. The average family size was roughly five members.
Eleven households responded to the interview. The village is situated on
the banks of the river Banas, which forms a moderately rich fertile plain.

Where, t is the operating time period/lifetime of the equipment and is considered as 10 years
for this calculation, and i, is the rate of interest and is assumed to be 8% for the present
calculations, given the then prevailing market interest rate for long-term deposits in India.
However, we also use a 3% rate (savings bank interest rate prevailing in 2013) to arrive at a
range rather than a single number.
6We declared that all data and information were to be used for academic purposes (PhD

thesis of the first author and any academic publication out of it) with due acknowledgment
to the funding sources and that no information would be shared for commercial purposes.
7 The questionnaire is provided in the Appendix.
 Ecology, Economy and Society–the INSEE Journal [74]

We estimated the magnitude of the rebound effect by studying how access

to efficient lighting and a solar microgrid changed energy-use patterns and
the socio-economic impacts of the same.
4.1 The Socio-economic Structure of the Village
Cultivation was the major occupation in the study village. About 70% of the
households in the village were engaged in cultivating different varieties of
pulses. A few individuals worked as marginal labourers (21%) in various
menial jobs like construction, long-distance truck driving, and intermediate
short distance non-motorized cart driving (7%). Some households received
a secondary source of income from wage earnings during the non-
agricultural seasons. It was difficult to determine their exact incomes
because householders did not have fixed monthly incomes, salary slips, or
registered labour incomes. Our survey data revealed that two households
were below the poverty line and the rest were only marginally above it. All
the households were in the low-income category. The income from
marginal labour was approximately $6.35 per day (₹400).8 The cultivation
workforce was mostly from within the family, and they mainly practised
subsistence farming where they produced crops for their consumption. The
average monthly expenditure per household was $97.5 (₹6,142.5). The
minimum and maximum reported monthly expenditures were $31.75
(₹2,000) and $174.6 (₹11,000), respectively. Among the villagers, 62% were
male and 38% female; 54% were adults and 46% were below 18 years of
age. Only two adults had a formal education. Those under 18 years,
however, attended school at Khareda regularly. All the households had a
residential unit with an average carpet area of 871 sq ft. The predominant
materials used to construct house walls were mud and unburnt bricks (93%
households), whereas the predominant material used to make the roof was
asbestos (86% households). About 14% of residential units had tiles on
their roofs. Most of the residential units were single-storied buildings with
one or two rooms and an open balcony in front of the rooms. Villagers
used this balcony as a kitchen and living and dining space. We present some
village characteristics vis-à-vis the state in Table 2.

8 All conversion rates are for the year 2013.

[75] Debalina Chakravarty and Joyashree Roy

Table 2: Socioeconomic Status of the Study Area

Study area State: Rajasthan Country: India
Principal crop Pulses Barley, wheat, Wheat, rice,
cultivated gram, pulses, and pulses, and jute
oil seeds
Main source of Cultivation and Cultivation Cultivation
livelihood labour
Average monthly $97.5 $50 $18–21
family expenditure (₹6,142.5) (₹3,200) (₹1,175–1,350)
Gender ratio 666:1000 861:1000 940:1000
(Female: male)
Literacy rate Very low 61.44% 74%
(2%
approximately)
Predominant Mud and unburnt Stone: packed Burnt brick
material of the wall bricks with mortar
Predominant Asbestos cement Stone/slate Concrete
material of the roof
Source: Census of India (2011); Ministry of Statistics and Programme
Implementation (2012)
4.2 Access to Energy Sources
At the time of the survey, households were either using energy sources
available in the market or their own sources. They were using kerosene,
wood fuel, dung cakes, solar microgrid electricity, and battery power. Each
household had one ration card issued against the name of the male head of
the family, which gave them access to the public distribution system (PDS).
Each household, or each ration card, was allocated four litres of kerosene
per month. Kerosene is widely used in cooking (Lam et al. 2012), but in the
surveyed village, households used wood fuel and dung cakes for cooking
and kerosene for agricultural purposes like operating irrigational pump-sets
and spraying fertilizers. Kerosene was not used for cooking also because
there was a cultural preference for chulah (mud-oven) cooked food. For
lighting, all the households have been using solar panels and lanterns since
2003–04. While the lanterns only provide a maximum of four hours of
illumination service per day, under the new solar microgrid system, a
household has access to round-the-clock electricity for illumination and
space-cooling (fans or room coolers could be connected). If necessary, and
if they could afford to pay, they could also connect other household
appliances like televisions, buttermilk machines, grinders, etc.
 Ecology, Economy and Society–the INSEE Journal [76]

Table 3: Major Energy Services and their Sources of Energy

Lighting Other energy
Energy service Space-cooling
(illumination) services
Pre-solar Solar panel with a None
None [0%]
microgrid domestic lantern [0%]
(Personal hand fan
electricity system (4 hr/day)
only)
access [90%]
Post-solar
microgrid Solar microgrid electricity [77%]
electricity (24 hrs/day)
access
Buttermilk
machines and
New electric
televisions were
Change in Consumption ceiling fans
purchased and
usage increased [77%] installed
installed in 5% of
[65%]
the surveyed
households
Source: Household sample survey
Note: Percentage of households is in parentheses.
The solar microgrid gave households access to both illumination and
cooling services. Earlier, households could not have possibly used
appliances like fans or coolers/heaters because of affordability issues.
4.3 Solar Microgrids and Electricity Access
The solar microgrid system installed in the study village was of 2 kW
capacity. Households paid in advance for the energy service. A 100%
advanced payment helped the producer ensure that there was demand for
the installed capacity, and people were used to such arrangements because
they were familiar with mobile phone recharge services. The households
adopted the payment system without any hesitation. The producers engaged
a technician to collect the money. Based on the specific needs of
households and the amount paid, the power company’s controller used the
house’s consumer identification number to set the individual household
meter through a wireless network. A connection used for a minimum of
two lights bulbs could be recharged at $0.80 (₹50) and a minimum of two
lights and one fan at $2.78 (₹175). On average, in a month, a household
spent $0.32 (₹20) on recharges, and the modal value of recharge payment
was $0.80 (₹50). This was possible because monthly recharges were not
mandatory. A household could recharge again after the amount was
exhausted. Thus, there was no specific monthly electricity bill in these
households. Households could decide on their service demand level
according to what they could afford at that time.
[77] Debalina Chakravarty and Joyashree Roy

Before getting access to the solar microgrid, most households had just one
or two solar lamps from the 2003–04 programme. They had been using
these appliances for nine to ten years. A few of them needed replacement
appliances (14%). During the survey, we observed that the solar microgrid
company had provided all village households with new microgrid
connections with two 6 W compact fluorescent lamps (CFL) worth $28.57
(₹1,800) free of cost. If a household used a 6 W CFL for one hour, it cost
$0.0024 (₹0.15) under the solar microgrid scheme. Similarly, if they used a
40 W fan for one hour, it cost $0.059 (₹0.37). So, a household paid $0.40
(₹25) per unit (kWh) of solar microgrid electricity.
This amount is nearer the electricity rate in the US ($0.48/unit or ₹30/unit
in March 2013) and is much higher than the cost of India’s grid-connected
electricity ($0.13/unit ₹8/unit in March 2013, on average). It is worth
mentioning that the price of grid-connected electricity in India in 2013
included a subsidy of 20–50% at the consumer end. The installation cost of
a solar microgrid system is two-and-a-half times higher than setting up a
connection to the centralized grid electricity supply system (CEA 2012). In
the case of energy-efficient appliances, the capital cost or initial purchase
cost is also a significant catalyst for energy consumption. However, energy-
efficient technologies have a higher initial cost that acts as a barrier to faster
adoption, especially in developing countries (Fowlie et al. 2018; GEA 2012;
Toman 2003; Bruckner et al. 2014). Therefore, the estimation process needs
to consider the fixed capital cost and variable costs and calculate the
annualized cost for each type of equipment for energy access.
In a supply-constrained scenario, comparing the costs of two competing
systems (domestic solar lantern systems and microgrid connectivity
systems) generates interesting results. The annualized cost per unit (kWh) of
electricity from a community-scale solar microgrid is still much lower than
the cost of the electricity generated from the solar home lantern system
(Table 4). This is due to the up-front cost of the individual solar panel for
the domestic lantern system. So individual households with access to
community-scale solar microgrids benefit from economies of scale and get
electricity at a cheaper price when compared with the domestic lantern
system. In monetary terms, our estimates show that individual households
can save approximately $0.21 (₹13) on one unit (kWh) of energy if they
switch from individual PV-based systems to microgrid systems. Annually
one household can save around $142 (₹8,946) by using the solar microgrid.
 Ecology, Economy and Society–the INSEE Journal [78]

Table 4: Energy Sources and Their Corresponding Costs, Services, Appliances in

Use, and Average Time of Usage
Domesti
c solar
Energy
panel Solar microgrid electricity
sources
lighting
systems
Time of
access 4 24
(hrs)
Annualize
d cost per
kWh 0.95* 0.64*
energy 0.74** 0.59**
($)
Services Lighting
Lightin Coolin Entertainme
Cooking Other
provided only g g nt
CFL, Television, Buttermil Mobile
Appliance Solar Fan,
night radio, DVD k chargin
s in use lamp cooler
bulb player machine g
4-6 2–6
Duration
(CFL) (fan)
of use in a 2–4
4 3–5 2–4 1–1.5 2–4
household (television)
(night (cooler
(hrs/day)
bulb) )
Source: Estimates based on household sample survey data
Note: *Estimated using 8% of the discount rate.
**Estimated using 3% of the discount rate.

Therefore, for the end-users in our case study, it is economic to use

community-scale microgrid electricity. This has been shown in other
literature as well (Chaurey and Kandpal 2010). Our survey revealed that
with 24x7 access to the solar micro-grid, households preferred to keep one
light bulb outside their homes illuminated for at least eight hours after
sunset for security reasons. When you consider that the domestic solar
lamps only provided four hours of illumination, it is easy to see that access
to energy from the microgrid and efficient electric appliances doubled the
consumption of energy services in the sample households.
Above 90% of respondents agreed that the socio-economic condition of
end-users has improved with 24x7 access to electricity from the solar
microgrid.9 The demand for entertainment services via television and radio

9Rest of the 10% of the respondent choose not to specify anything.

[79] Debalina Chakravarty and Joyashree Roy

use have also increased. People are less afraid of insect attacks at night;
public places feel more secure; women can cook food even after sundown,
which gives them flexibility when it comes to other chores and has allowed
them to do more productive work; students have more time to study as
they can study at night too. In the village we studied, the basic need was
illumination as the village layout was open enough for there to be natural
ventilation. Demand for household appliances for food preparation went
up when a new appliance—the buttermilk machine—was purchased by
some of the households. The uptake rate was as high as 77%, signifying that
what was once accomplished using women’s physical labour was now being
done by modern electric appliances.
Table 5: The Perceived Impact of 24x7 Electricity
Perceived impact of Yes No Don't know
efficient (% of (% of (% of
electrification responses) responses) responses)
Indoor environment 100% 0% 0%
becomes less smoky
Increase in demand 100% 0% 0%
for lighting/cooling
Increase in study time 100% 0% 0%
for children
More time allocation 100% 0% 0%
for daily primary jobs
like cultivation
Better livelihood 100% 0% 0%
practices with
electricity
Others 90% mentioned other benefits such as increased
access to entertainment services via television and
radio, less fear of insect attacks at night, and flexible
cooking times
Source: Estimates based on household sample survey data
4.4 Avoided Direct Emission
The total demand for energy in the village was 2 kWh per day, as
determined by the maximum capacity of the system. If this same amount of
energy had been generated by a centralized, thermal electricity grid, 3.56 kg
of CO2 would have been produced per day (1,299 kg of CO2 per year),
assuming an emissions factor of 0.89 tons of CO2 for every megawatt-hour
of electricity (CEA 2012). The solar microgrid system in our case study
helped to avoid 3.56 kg of direct CO2 emissions per day. However, when
 Ecology, Economy and Society–the INSEE Journal [80]

considering these avoided emissions, one needs to keep in mind the costs
involved. From the generation company’s perspective, avoiding the 3.56 kg
of CO2 caused an additional 54% generation cost compared to the
centralized grid-connected power supply system in India. This was
estimated based on CEA data from 2012 about the cost of power projects
per megawatt.
4.5 Changes in Electricity Service Demand
A key aim of the survey was to understand the energy service demand
patterns of households before and after they got access to the solar
microgrid. The annualized per unit cost of electricity from the solar
microgrid was found to be 32% lower than in the case of the solar lantern
system. The annualized unit cost of electricity services was used to estimate
the percentage change in the price of energy services at the household level.
Corresponding changes in the demand for illumination services and all-
encompassing electricity services have been estimated in Table 6.
Table 6: Estimated Frontier Rebound Effect
Energy services (At 8% (At 5% Implication of
discount discount estimated rebound
rate) rate) effect
For illumination services 151% 165% Presence of the
frontier effect
For all the available 192% 199% Presence of the
energy services frontier effect

Source: Estimates based on the data from the household survey

The rebound estimates clearly show that the percentage change in the
demand for energy services with respect to the price of those services was
more than 100%. Thus, a 1% decrease in prices will result in a 1.51–1.65%
increase in the demand for illumination services and a 1.92–1.99% increase
for all other available energy services. This is because consumers earlier had
unmet energy demands because of the constraints of only four hours of
access to electricity. After the solar microgrid was set up, they had
uninterrupted supply of electricity throughout the day. However, it must be
noted that there is an upper limit to the amount of electricity that the
community can draw from the microgrid system, i.e., based on its initial
capacity on installation. Frontier estimates can be higher than the estimated
values when supply is unlimited. The literature suggests that with the
introduction of efficient appliances, the energy demand will increase
manifold to satisfy unmet demand.
[81] Debalina Chakravarty and Joyashree Roy

The frontier rebound effect arose in this case study because households
increased their direct energy consumption. Their newfound access to
affordable electricity allowed them to adopt new appliances (fans, radios,
televisions, cell phones, and kitchen appliances) that led to these
communities, who had no previous access to modern energy, to demand
new energy services that can be considered welfare-enhancing (Saunder,
2013; Jenkins et al. 2011). Therefore, the study’s estimate is conceptually
equivalent to the frontier rebound estimate suggested by other literature
(Jenkins et al. 2011; Saunders 2013; Saunders and Tsao 2012; Tsao et
al. 2010; Sorrell 2007, 2009). A rebound case study in rural India (Roy 2000)
estimated a partial rebound effect at about 50% for illumination services
after introducing only solar lanterns. That was lower than this study’s
estimated rebound magnitude. For some households, Roy (2000) observed
that the rebound effect was about 200% for both lighting and cooking
services, which are quite close to the rebound estimates of this study. In
another study by Burgess et al. (2019), the researchers found high price
responsiveness for diesel, off-grid, and microgrid solar in the state of Bihar,
India. Such high demand elasticities are striking when compared to those in
developed countries where saturated demand levels and high-income levels
mean that the demand curve is expected to be almost vertical. Thus, only
extensive changes in price can induce changes in demand in those
countries.
In our study, we found that 23% (or 5 out of 22) of the households had not
taken a solar microgrid electricity connection because they found the costs
prohibitive. These households were using the solar lantern system with a
battery that let them run at least one light bulb at night; however they found
the 24x7 electricity service too expensive. However, it is likely that these
households will eventually switch services, either after the lifetime of their
current equipment or when their incomes improve. Households that cannot
afford the switch can be offered support through new policies that, for
example, buy back older solar panels and lighting systems. How such
policies can be operationalized, or what other alternative institutional or
policy arrangements can be made, are research questions for the future.

5. CONCLUSION
The case study shows that electrification via solar microgrids offers rural
households in India social, economic, and environmental benefits. Solar
microgrid systems combined with energy-efficient end-use appliances result
in a quick reduction in the demand gap. Lessons learned from the case
study are relevant at the policy level as well. In contrast to newly emerging
 Ecology, Economy and Society–the INSEE Journal [82]

research (Lee et al., 2020; Burgess et al., 2019), this study clearly shows that
poor rural households in India value round-the-clock access to electricity
service. It reduces the drudgery of physical labour and provides flexibility in
how time can be productively utilized, especially for women. Therefore,
access to electricity, from a class and gender perspective, can be considered
essential in terms of a decent standard of living and the Sustainable
Development Goals (Hayward and Roy 2019; Rao and Min 2018). The
study found that solar microgrids offered many additional benefits to a
remote village: increased security in public places at night, access to
entertainment services, pest reduction, and more time for students to study.
In the village we studied, households consumed very little electricity
(around 0.2 kWh per day) compared to an average household in India (12
kWh per day). This can be seen as an indicator of the electricity demand
gap, where there is scope for accelerated provision of access to electricity.
The frontier rebound effect of illumination services is estimated to be more
than 100%, which implies that a 100% increase in energy efficiency will
increase the demand for energy services by more than 100% because of the
shift in consumption. This signifies an improvement in end-user utility and
thus the well-being of low-income households. This result is consistent with
existing literature that postulates that the introduction of energy-efficient
supplies will increase demand manifold. In the context of energy-access-
equity-driven climate policy, where the goal is to reduce energy poverty and
unmet energy demand, the frontier rebound effect can indicate whether the
implementation of energy-efficiency policies affect the rate at which unmet
demand is reduced.

ACKNOWLEDGEMENT
The authors acknowledge the active cooperation of the CEO of the private
microgrid power producer and distributor in India. We are thankful to Mr
Suman Dutta from Global Change Programme of Jadavpur University
(GCP-JU) for his support in collecting data and Dr Shyamashree Dasgupta
for her valuable comments on an earlier version of this article. The authors
also acknowledge the financial support from GCP-JU for the field study.
Debalina Chakravarty acknowledges the introduction to the private
microgrid power producer and distributor in India and is grateful for the
short-term fellowship grants from the Development Impact Lab (DIL),
University of California, Berkeley, USA, and to the West Bengal State
Government Doctoral Fellowship Programme, India, at the Department of
Economics, Jadavpur University. Joyashree Roy acknowledges funding
under the EDIT-AIT project. EDIT-AIT project at the Asian Institute of
[83] Debalina Chakravarty and Joyashree Roy

Technology, Thailand received funding from the Energy Demand changes

Induced by Technological and Social innovations (EDITS) project, which is
part of the initiative coordinated by the Research Institute of Innovative
Technology for the Earth (RITE) and International Institute for Applied
Systems Analysis (IIASA) (and funded by Ministry of Economy, Trade, and
Industry (METI), Japan). All conclusions and errors are the responsibilities
of the authors and reflect their research analysis and do not reflect any
other institutions’ viewpoint.

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Appendix
Questionnaire for Rural Household Units
Usage pattern of lighting and space cooling in India’s rural household sector
________________________________________________________________

This questionnaire collects information on ownership patterns and usage of energy-

efficient appliances in India as a part of a study on estimating the rebound effect in
energy consumption in the Indian economy. The research is being carried out by

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REQUEST FROM THE RESEARCHERS

It will take you approximately 15 minutes to respond to the questionnaire. Please

take some time to answer the questions carefully. This will help us capture a set of
crucial information. We would appreciate your responses.

We assure you that your personal information will be kept confidential and your
responses will be used purely for academic purposes. We shall be thankful to you
for your completing the questionnaire and helping us in our research study.

With regards,

Name of the investigator:

…………………………………………………………………..

Date: ……………………....…. Time: …………………. Signature:

..............................…

1. Name of the respondent:

a) Address:
b) Contact number:

A. Personal Details
1. Age of the respondent:
2. Highest level of education attained by any family member:10
3. Are you one of the earning members of the family? Yes/ No
4. How many earning members are there in your family?
5. What is the composition of your family (mention numbers)?

10(a) < class 10 (b) class 10–12 (c) above 12 but not graduate (d) graduate (e) post-graduate
and above
 Ecology, Economy and Society–the INSEE Journal [90]

Adult Children
Male
Female

6. Carpet area of your living space (in sq ft):

7. Is the residential unit owned by you or rented? Yes/ No
8. Family monthly income level:
9. Family monthly expenditure level:
10. Major source of income/major occupation? 11
11. What are the predominant materials of the roof and walls of your house?
a) Wall:12
b) Roof:13

B. Energy Consumption Details

12. Source of energy:
a) Pre-electricity access scenario:
Energy services Fuel type Amount of fuel used Expenditure on fuel
used14 (in the (specify the unit) used (in INR) (per
last 3 months) (per month) month)

Lighting

Space cooling

b) Post-electricity access scenario:

11 (1) Cultivator, (2) main worker (< 6 months), (3) marginal worker, (4) agricultural
labourer, (5) household industry worker, (6) other worker.
12 (1) Grass/thatch/bamboo, (2) wood, (3) mud/unburnt brick, (4) plastic/polythene, (5)

burnt brick, (6) stone, (7) GI metal/asbestos sheets, (8) concrete, (9) any other.
13 (1) Grass/thatch/bamboo, wood, mud, etc, (2) plastic/polythene, (3) tiles (handmade

tiles/machine-made tiles) (4) burnt brick, (5) stone, (6) G.I. metal/asbestos sheets, (7)
concrete, (8) any other.
14 (1) Coal, (2) coke, (3) electricity, (4) kerosene, (5) solar, (6) LPG, (7) petrol, (8) diesel, (9)

wood fuel, (10) dung cakes, (11) others

[91] Debalina Chakravarty and Joyashree Roy

Energy services Fuel type Amount of fuel used Expenditure on fuel

used15 (in the (specify the unit) used (in INR) (per
last 3 months) (per month) month)

Lighting

Space cooling

13. Total electricity consumption pattern:16

Months Units consumed Expenditure on electricity (in INR)

June
May
April
March
February
January
14. Total electricity consumed in the last 2–3 months:

15 (1) Coal, (2) coke, (3) electricity, (4) kerosene, (5) solar, (6) LPG, (7) petrol, (8) diesel, (9)
wood fuel, (10) dung cakes, (11) others
16 Investigators are requested to fill the questions of this section himself/herself from the

latest electricity bill of the respondent.

 Ecology, Economy and Society–the INSEE Journal [92]

15. Consumption pattern of appliances:

Service Specification Wattage Hours Hours First Remark/other
consumption in use in use cost/ details
in in capital
summer winter cost
Post electricity access consumption pattern (in 2012–2013)
Lighting Incandescent
100 W
Incandescent
60 W
Incandescent
40 W
Night bulbs
15 W

TFL (T5, T8,

T12)
Tube 2 ft
(narrow)
Tube 4 ft
(narrow)
Tube 2 ft
(regular)
Tube 4 ft
(regular)

CFL
(retrofit/non
retrofit)
(mention W-
5/7/9/11/23)

Total
Space Ceiling fan
cooling (32", 48", 52")
AC (0.75, 1,
1.5, 2 ton)

Total
Other
(Specify)
[93] Debalina Chakravarty and Joyashree Roy

C. Perception about the impact of efficient electrification

16. Do you feel that your environment has become less smoky?
Yes/No/Don’t know
17. Have you increased your lighting/space-cooling service consumption?
Yes/No/Don’t know
18. Do you think your kids now have more time for study? Yes/No/Don’t
know
19. Do you think you can now give more time to your daily primary job like
cultivation, etc.? Yes/No/Don’t know
20. Do you think now you have a better livelihood with electricity?
Yes/No/Don’t know
21. Any other impacts (please specify):

End of survey. Thank You!