Discussion » Regulatory challenges for mini-grid and off-grid energy services development in India
Regulatory challenges for mini-grid and off-grid energy services development in India
Dear everyone,
Policy intervention is meant to support certain goals, such as the provision of electricity in rural villages. However, these policies sometimes have unintended consequences, effectively inhibiting the process rather than facilitating it. Moreover, policies and regulations that serve one purpose might be inhibitory in other areas, such as the development of private sector-led provisions of electricity services. These may include: business registration, taxation, subsidy administration, and the extension of the central grid.
Together with my classmates Kieran Coleman, Neda Oreizy, and Sunny Xu, I am working on a year-long study on the role of policy in mitigating risks and providing opportunities to private sector development of energy services in India. We are very interested in your opinions on the following questions:
1.) From your experience, which policies or regulations have been most inhibitory for your work and posed the greatest challenge?
2.) What are specific policy responses that could be implemented at the local, provincial/state, or national level to resolve these challenges?
3.) Overregulation can be a problem in itself. In which areas do you feel regulation should be left to the market?
We look forward to your insights. If you are interested in taking a larger role in our research, we hope you might consider answering our online questionnaire.
Best,
Julia
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Julia Heckmann
Johns Hopkins University School of Advanced International Studies
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Last week, I had a few conversations with India policy experts and they brought up an interesting issue:
Energy services provided by private companies are quite unregulated and many businesses are not registered. Regulatory uncertainty means that there is a wide variety of services provided, which could allow a better fit for each community, but there are fewer financing opportunities when banks are often not willing to finance risky projects (particularly where the central grid expands and the investments could become unviable).
Is it necessary to formalize the sector? How do you avoid overregulation?
The sector seems to have the worst combination - over regulation, with lax enforcement which will make it really hard to raise any kind of serious investment.
Uncertainties where the grid is present, but mostly disconnected are a big barrier to any process where payment is delayed (e.g. repaying a loan; or PAYG) because who knows when the grid will become usable and loan/payment defaults will increase.
And the barriers on FDI are significant, tilting programs towards areas where subsidized loans are available and away from places where companies have to pay the protectionist interest rates from Indian banks but are prevented from accessing impact investors overseas.
Also .. subsidized kerosene and grid creates unrealistic expectations of pricing and a lower willingness to pay than almost any other developing country.
Discussion » Regulatory challenges for mini-grid and off-grid energy services development in India
Regulatory challenges for mini-grid and off-grid energy services development in India
Dear everyone,
Policy intervention is meant to support certain goals, such as the provision of electricity in rural villages. However, these policies sometimes have unintended consequences, effectively inhibiting the process rather than facilitating it. Moreover, policies and regulations that serve one purpose might be inhibitory in other areas, such as the development of private sector-led provisions of electricity services. These may include: business registration, taxation, subsidy administration, and the extension of the central grid.
Together with my classmates Kieran Coleman, Neda Oreizy, and Sunny Xu, I am working on a year-long study on the role of policy in mitigating risks and providing opportunities to private sector development of energy services in India. We are very interested in your opinions on the following questions:
1.) From your experience, which policies or regulations have been most inhibitory for your work and posed the greatest challenge?
2.) What are specific policy responses that could be implemented at the local, provincial/state, or national level to resolve these challenges?
3.) Overregulation can be a problem in itself. In which areas do you feel regulation should be left to the market?
We look forward to your insights. If you are interested in taking a larger role in our research, we hope you might consider answering our online questionnaire.
Best,
Julia
--
Julia Heckmann
Johns Hopkins University School of Advanced International Studies
Last week, I had a few conversations with India policy experts and they brought up an interesting issue:
Energy services provided by private companies are quite unregulated and many businesses are not registered. Regulatory uncertainty means that there is a wide variety of services provided, which could allow a better fit for each community, but there are fewer financing opportunities when banks are often not willing to finance risky projects (particularly where the central grid expands and the investments could become unviable).
Is it necessary to formalize the sector? How do you avoid overregulation?
The sector seems to have the worst combination - over regulation, with lax enforcement which will make it really hard to raise any kind of serious investment.
Uncertainties where the grid is present, but mostly disconnected are a big barrier to any process where payment is delayed (e.g. repaying a loan; or PAYG) because who knows when the grid will become usable and loan/payment defaults will increase.
And the barriers on FDI are significant, tilting programs towards areas where subsidized loans are available and away from places where companies have to pay the protectionist interest rates from Indian banks but are prevented from accessing impact investors overseas.
Also .. subsidized kerosene and grid creates unrealistic expectations of pricing and a lower willingness to pay than almost any other developing country.