Solar Lighting could make less dependent on kerosene, a fuel that is unsafe and also put a burden on Government for subsidy, according to a study in 2017.
Government could save around 600 INR on every consumer who makes a switch from kerosene to solar resources for lighting and every household too could save around 576 INR by the switch, as reported by International Institute of Sustainable Development, a not-for-profit organization based in Canada.
The subsidized kerosene that is provided through Public Distribution System cost the government 11,496 crore INR in 2015-16.
This represented 41.7 percent of all fuel subsidies. However, about 45 percent of subsidized kerosene goes to black market and never meets its purpose.
Why Kerosene is Hazardous?
In India, the poorest 40% households consume about 57% of kerosene allocated to PDS, as per May 2017 IISD brief.
Over a decade consumption of kerosene as primary fuel in rural households has fallen from 55.6 percent to 43.2 percent, according to The Energy and Resources Institute, New Delhi.
During the same period, percent of people using solar lighting has increased from 0.3 percent to 0.5 percent.
The subsidies provided by government makes the kerosene more affordable but the light produced from these lamps has low quality and comes with risks of fire and poisoning, as IndiaSpend reported.
Challenge: How to make a smooth switch?
The subsidies on kerosene make solar energy less desirable for the poor, according to The Health and Environment Alliance, Brussels.
The solar appliances are costly and thus poor households find it hard to afford, unlike kerosene. Subsidy reform coupled with overcoming the hurdles to increase the use of off-grid solar energy.
Other Benefits of Off-Grid Solar Energy
According to the Climate Group which is an international NPO, schoolchildren with access to solar lighting tend to study for one extra hour longer per night. The clean lighting solutions have provided more than one billion hours of extra night study time to 2.5 million kids.
Also, by 2015 at least 200,000 people were employed by the off-grid lighting sector in India. The job to population ratio in solar energy lighting sector is 30 jobs per 10,000 people, as per 2014 analysis by United Nations Environmental Program (UNEP).
Why Solar Penetration is Low in India
High initial cost of investment and persistent subsidization of kerosene are the main reasons, according to IISD analysis.
There are almost no savings in expensive solar systems over kerosene. One way to make the switch smoother is to provide subsidy to customers purchasing solar lighting systems.
Additionally, the change reduces the fiscal burden of government and those savings could be directed towards funding programs that promote solar penetration.
There is another idea that is counter-intuitive to promoting solar lighting butt yet considerable: low or no cost solar lanterns distort the market and kill competition and thus, they should be phased out. Private companies can’t sustain their businesses when there are cheap subsidized products.
Usage of Mobile money, pay-as-you-go models, monthly installments and aggregation of small borrowers to facilitate loans are also some innovative financing models. These models have seen a slow uptake in India and only few companies opt to try these models, brief said.