‘Energy Coupons’ way forward

The Government of India has been steadfastly expanding the reach of electricity as well as of clean cooking gas to all corners of the country. Village electrification has been completed and household electrification is expected to be accomplished within the next few weeks. Similarly, use of gas is being promoted as a clean cooking and transportation fuel, both in urban areas, by expanding the natural gas grid, as well as in villages under the Ujjwala Scheme (distribution of LPG connections), resulting in a steady decline in use of kerosene and fuel-wood.

It would be interesting to see the impact on the stakeholders across the value chain in the coming years: End-consumers in terms of energy usage and improved living standards; Utilities (power distribution and oil marketing companies) in terms of tapping new markets with recovery-related issues; central and state governments in terms of meeting social objectives with financial constraints; and, environmental think-tanks in terms of pollution and GHG emissions.

Current schemes lack a holistic approach, with a fixed set of provisions in terms of energy type, its quantity and usage options. As has been observed in several cases, due to lack of energy demand or poor financial health, many consumers discontinue the uptake of energy and many times are irregular in payments to the service providers.

As a result of these delinquencies, power distribution and oil marketing companies become unwilling to maintain the service levels, leading to disruption/closure of such schemes. Amidst concerns on energy poverty, energy security and falling farm income, a holistic approach is required to solve several of these pervasive challenges.

‘Energy Coupons’ present a unique opportunity to meet the twin objectives of energy access and its sustainability (both economic and ecological). These coupons may be used for availing a bouquet of energy-related services; a consumer may use coupons to charge her pre-paid electricity meter, pay for LPG refill, or refuel his tractor. Innovative examples can be use of coupons to run an electric induction cookstove rather than getting the LPG cylinder refilled.

Coupons can be denominated on commonly accepted energy terms like kilocalories, or tons of oil equivalent, and the quantum of their issuance can be fixed based on minimum lifeline energy requirements of a household as estimated by experts. They can be issued by governmental agencies to the identified segment of the population, currently being served under various social schemes related to energy; they can also be integrated within the envisaged ‘Universal Basic Income’ so as to reduce energy poverty.

Taking advantage of large-scale digitisation in the country and to curb malpractices, option to issue coupons in de-materialised format needs to be provided (a kind of energy wallet).

Benefits of using coupons

Trading of coupons can be permitted to encourage consumers to conserve energy, with an option to sell them to other households and industries. Monetisation of coupons towards purchase of energy-efficient devices like LED lamps and irrigation pump-sets would lead to reduced consumption and associated environmental benefits.

Coupons may be banded based on their environmental and social attributes like greenhouse gas emissions and employment generation; for the same number of coupons, a consumer gets higher quantity of cleaner energy generated using a micro-grid. This may encourage entrepreneurs to set-up village-level power plants running on solar or biogas plants generating cooking fuel for households, or even electric vehicle charging stations. All these measures will reduce crude-oil imports and enhance energy security of the country while improving on-ground situation in the villages.

Coupons would easily fit into the pre-paid metering scheme which is expected to be rolled out across the country in the coming months. Power distribution utilities will be able to raise bills on commercial basis, obviating subsidy support from the respective governments. Billing consumers at standard tariffs will help estimate the actual loss levels of the utilities, which many a time is masked under the guise of subsidised power, offered at flat rates. Akin to their generation and transmission counterparts, distribution companies would be able to operate on sound corporate principles.

With India taking the mantle of climate leadership, ‘Energy Coupons’ can help it meet its sustainable development goals of energy access and clean energy, with several co-benefits. It will provide entrepreneurial opportunities to the rural folk, leading to a rapid increase in non-farm incomes. All this, with better performing energy utilities working on market principles and motivating human behaviour towards efficient use of energy.

(Thapar is senior faculty at the TERI School of Advanced Studies; Sharma is a professor at IIT Delhi)