Preparation of a Village Energy Plan

The first step in the Programme to bring about village energy security is to prepare a Village,Energy Plan, with active and full participation of the village community. An assessment of the total energy demand should be made, which may include requirements for:

  • Household cooking, lighting and entertainment
  • Community, commercial facilities such as shops, streetlights, health centre, school, flour mill, information and communication technology
  • Pumping water for drinking, irrigation
  • Rural industry such as brick making, tobacco curing, silk reeling, agro processing, spices and rubber drying, etc.

An assessment of the biomass resources available locally should be carried out. These may include resources such as:

  • Wood and other raw materials for energy production from fast growing plant species
  • Oil and other raw materials for energy production from oilseed bearing trees
  • Dung and agro residues for energy production .

Based on the total energy requirements and the local resource availability, the energy production system should be configured. The energy can be supplied either in stand-alone mode or distributed through a local mini grid. As the economics is very sensitive to ' capacity utilization of the energy production unit, high capacity utilization should be aimed at. Emphasis should be on energy to be proVided for productive activities with thrust on micro enterprise development, backed by micro credit facilities' with' a view to facilitating job creation, income generation, increasing the purchasing capacity and reducing the migration from villages.

A model Village Energy Plan for, a typical village having 100 households and a population of 500 has "been -prepared. 100 households have been considered as a typical size" of a village as the remaining one lakh villages to be electrified are mainly in:remote areas and would have on average about 100 households. On the ' other hand, it is assumed that the five lakh villages that have already been connected to the grid would on average also have about 100 unserved households. (A total of 78 million rural households spread over six lakh villages".still do not use electricity, which gives an average of 130 households to be covered per village.)

Energy requirements in the typical ' Villa 6--have been assumed to include thermal energy needed for cooking; electricity for domestic use, community facilities, commercial establishments, micro enterprises, one pumpset for drinking water supply and two pumpsets for irrigation; and, motive power for six irrigation pumpsets. The proposed system configuration comprises four dung based community biogas plants of capacity 6 M3 each and four leafy biomass based community biogas plants of capacity 12 M3 each; two 9 KW biomass gasifiers coupled to 100% producer gas engines; and, six 5 H.P. irrigation diesel pumpsets. The total biogas requirement for 60 families that opt for' cooking gas has been estimated at 72 M3 / day; peak electrical load at 16 KW with annual energy generation of about 50,000 kWh. 3075 litres per year of biofuel'will be required for substituting diesel in the six irrigation pumpsets. Plantations will be taken up over 10.5 ha land for supply of wood, oil and other raw material for the various energy production systems.


The financing structure aims at development of bankable projects using normal debt ' equity, low / interest free financing, with funding for the capital assets to come largely from Government grants. The manner in which the Central assistance will be shared by various Central Ministries can be worked out in due course. All project assets will be owned by the community through a Village Energy Committee.. The raw materials or feedstock such as wood or biofuels will be purchased from the villagers or others, and the users will pay for energy services in cash or in kind through supply of raw materials or labour depending upon their capacity.

A Village Energy Fund will be created with an initial corpus through contributions from every household in the village. The fund alongwith the grant will be managed by a local bank. Loans / micro credit, will be provided by commercial banks, NABARD, Rural Electrification Corporation (REC), Small Industries Development Bank of India (SIDBI) and other financial institutions, refinanced through grassroot financial intermediaries or grameen banks. REC has earmarked Rs.500 crore per annum for soft loans with an interest rate of 3-5%, to be waived off completely if the project is impl~mented within. a stipulated time period. Financial institutions ~and banks, may not be very willing to lend for such projects in view of the risks involved. Some form of credit guarantee may, therefore, be necessary.

The total investment for implementation of the typical Village Energy Plan comes to about Rs.20 lakhs. This covers the capital cost of plantations, energy.. production system and distribution network. The proposed financing structure involves a one-time grant from the Government and soft loan at an interest rate of 3% and repayment period of ten years. The following scenarios emerge from the financial analysis of the capital cost, operation and maintenance cost and revenue generation:

  • Under the first scenario which involves 100% loan, each household would have to carry a gross burden of Rs.237.57 per month on account of electricity for domestic / community use and biogas for cooking. For electricity alone, the burden would be Rs.144.57 per household.
  • Under the second scenario which. involves 70% grant and 30% loan, each household would have to carry a gross burden of Rs.115.65 per month on account of electricity for domestic / community use and biogas for cooking. , For electricity alone, the burden would be.Rs.64.65 per household.
  • Under the third scenario which involves 90% grant and 10% loan, the gross burden on each household gets reduced to Rs.81.12 per month on account of electricity for domestic / community use and biogas for cooking. For electricity alone, the burden would be Rs.41.82 per household.
  • Under the fourth scenario which involves 100% grant, the gross burden on each household gets further reduced to Rs.63.70 per month on account of electricity for domestic / community use and biogas for cooking. For electricity alone, the burden would be Rs.30.40. per household.


Sustainable models for commun"ity -participation in planning, implementation and management of village energy, projects will have to be developed. Involvement of panchayats,, self help groups, NGOs and entrepreneurs is crucial in mobilizing the rural communities. The Constitution through the 73 rd Amendment has empowered the States to give the - Panchayats authority and responsibilities for preparation and implementation of plans for economic development and social justice, including generation and distribution of electricity through non-conventional energy sources. However, the States are I yet to enact the necessary legislation, and the panchayats are not ready in most States to take up such projects.

In view of this, appropriate Village-level Committees are proposed to be set up that are vested with the responsibility of planning, implementation, tariff setting and overall management of the projects. The energy production system is proposed to be operated as a business unit by the Village Energy Committee or as a franchise -leased out to an NGO, Self Help Group (SHG), equipment supplier or entrepreneur. The business unit will have to provide various energy services and collect the revenue from the users as per the tariff structure determined by the Committee.

Women should be central to any rural energy strategy. They have traditionally been managing local resources such, as fuelwood, cow dung and water. With adequate training, biomass resources provide a unique opportunity for women to organize themselves to plan for village energy production, to manage energy enterprises, and to even own them. Modern energy services, particularly for meeting the energy needs for cooking, heating, water, health and education can significantly improve the quality of life of women in villages.

About 18 lakh Self Help Groups are already operational in the country. Women's managerial and entrepreneurial skills have been demonstrated in various schemes such as those of the Self-Employed Women's Association (SEWA). The rural energy and water supply utility project in Pura village in Karnataka and in projects elsewhere have shown that besides being the main beneficiaries, women can also play a major role in the operation of the utilities as well as in the management of the energy enterprises.

Extensive capacity building activities will be necessary, targetted at different groups involved in the Programme. Government functionaries and NGOs will be trained by technical institutions and equipment suppliers in preparation of -Village Energy Plans. They will in turn help the Village Energy Committee to prepare the Plan, and will provide awareness and training to the villagers in the operation and maintenance of their systems.

The details of the model Village Energy Plan, the Financing Structure and the Modus Operandi of Implementation, are given in the Appendix. Brief write-ups on various biomass conversion technologies and their cost economics as well as case studies covering the resource - technology - management - dimensions which illustrate the concept of Energy Security in Villages through Biomass, are given in the Annexures.


Among various energy sources, biomass is the most labour intensive and has the highest and most diverse employment generation potential, which includes:-

  • Direct employment from biomass production, transportation and construction, O&M of plant and equipment
  • Indirect employment from biomass energy in industry, services, etc.
  • Induced employment from higher incomes

Wastelands and forests provide livelihood support to the villagers. They provide fuelwood, fodder and raw material for traditional cottage industries. In the 1.73 lakh forest fringe villages livelihoods mainly depend on forest produce. A majority of these villages are inhabited by tribals. Biomass production and energy production from biomass, interwoven with watershed and wasteland development, have the potential to strengthen the livelihood support systems of the rural poor, while protecting the environment.

It is expected that upto 25 direct and indirect jobs will get created in a typical village through biomass based energy production, in addition to income generation from supplemental activities. The Programme, therefore, has an employment generation potential of upto 15 million jobs covering all the villages in the country.


The total rural population of the country as per 2001 Census is about 700 million, which lives in about, six lakh.villages. The total electricity requirement in all the villages works out to 70 TWh / year (70 x109 kWh), assuming a consumption of about 100 kWh / capita / year. Assuming that 1.5 kg of wood is required to generate one unit of electricity, about 105 million tonnes of wood would be required for production of electricity through biomass gasifiers coupled to producer gas engines. If the electricity consumption is twice that -assumed, about 210 million tonnes of wood would be required. About 21 m ha of land would thus be required to generate the., required biomass under the latter scenario, assuming biomass productivity of 10 tonnes / ha / year (the productivity may vary according to the site quality and tree species). In addition, about 4.2 rn ha would be required for oilseed bearing trees. This could be developed from the aVailable 64 m ha of wasteland, or come from the additional area to be brought under tree:cover.

A substantive quantity of wood for electricity production could become available if the firewood currently used for cooking is saved through a fuel switch to biogas and use of improved cookstoves. About 167 million M3 of biogas would be required in all the villages daily @ 0.238 m3 per capita. Dung from the total cattle population of 257 million could yield about 40 million M3 of biogas per day. The plantations would provide the leafy biomass and deoiled cakes from the oil expeller units which could be used as feedstock to generate the balance biogas required to meet all the cooking energy needs.


A bankable commercial financial model should be evolved based on public-community-private partnership, to be funded by a combination of grant, soft loan and equity. Revenue streams should provide a reasonable surplus for the village community. The total cost of the energy production facility, distribution network and plantation cost for a typical village of 100 households has been estimated at about Rs.20 lakhs. A capital subsidy of 70% of the total project, cost, going upto 90%, could be considered for supporting a sustainable revenue model. The balance should come from equity by the Village Energy Committee / franchisee and through soft loan. Such projects would also attract CDIVI funding through the sale Of C02 credits, though this has not been included in the financing structure.

To start- with, it is proposed to take up about two lakh villages consisting of 1.73 lakh forest fringe villages and about 25,000 remote unelectrified villages. Of these, a large number are tribal villages. For such a programme, the total investment would be Rs.40,000 crore. If 90% of this comes as a grant, Central Financial Assistance of Rs.36,000 crore would be required over a period of ten years. In addition, the remaining four lakh villages could be considered under the Village- Energy Security Programme. For this, the total investment would be Rs.80,000 crore. If 70% of this comes as a grant, Central Financial Assistance of Rs.56,000 crore would be required. Thus, a total investment of Rs.120,000 crore would be involved in providing energy security to the six lakh villages in the country.


The following Plan of Action is proposed:

  • Formulation of a National Programme on Village Energy Security through Biomass
  • Sensitize the States, implementing agencies, NGOs, etc. about the concept and initiate training progammes for trainers
  • Take up extensive awareness and training programmes in villages for local communities, Government functionaries, local NGOs, entrepreneurs, etc.
  • Initiate preparation of village energy plans and their implementation in areas where conducive environment is readily available
  • In the first phase of the National Programme, take up two lakh villages comprising the forest fringe villages and the remote unelectrified villages
  • In the next phase, take up remaining four lakh villages

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Cooking Energy

Improved Cookstoves

100 households


60 households

Biogas requirement

72 m 3 /day

No. of Cattle


Dung Availability

600 kg/day

LeafyBiomass / Biowaste Requirement

800 kg/day

Electrical Load

Domestic Load (5.5 hours / day)

15 KW

Community Load

1.2 KW

Drinking Water

3.75 KW

Biomass Cutter

1 KW

Irrigation Pumps (3 hrs/day for 100 days):

2 x 3.75 KW

Rural Industry

5 KW

Peak Electrical Load

16 KW

Capacity utilization

32 %

Wood Requirement

75 tonnes / annum

Procurement price of Wood

Rs. 500 / tonne

Motive Power

Irrigation Diesel Pumpsets

6 x 5 hp

Biofuel Requirement

3075 liters /annum

Procurement price of Oilseeds

Rs. 3.0 per Kg

System Configuration

Capital Costs

( Rs. In Lakhs )

Improved Cookstoves

100 households


Dung based Biogas Plants

4 x 6 m 3 per day


Leafy Biomass based Biogas Plants

4 x 12 m 3 per day


Biomass Gasifiers with 100% producer Gas engines (incl. Transportation)

2 x 9 KW


Accessories incl Biomass Cutter

One no.


Oil Expeller

50-100 Kg per hour



Fast growing species

7.5 ha


Oil bearing trees (including maintenance)

3 ha


Civil Works (Biomass Gasifiers, Expeller)


Distribution System

2 Km LT Line


Village Energy Plan, Training and Monitoring


Total (Rs., lakhs)


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Electricity Generation

Annual Electricity Generation

50, 087 KWh/yr

  • Domestic / Community Use

35, 837 KWh/yr

  • Irrigation / Rural Industry

14, 250 KWh/yr

Capital Cost of Electricity System

Rs. 10, 50, 000

Annualised Capital Cost

Rs. 1, 22, 850

  • Domestic / Community Use (72%)

Rs. 88,452

  • Irrigation / Rural Industry (28%)

Rs. 34, 398

Annualised O&M Cost of Electricity System

Rs. 99, 065

  • Domestic / Community Use (72%)

Rs. 71, 327

  • Irrigation / Rural Industry (28%)

Rs. 27, 738

Plantations / Biofuel

Capital Cost of Plantations (10.5 ha)

Rs. 3, 15, 000

Incl. O&M Cost

Capital Cost of Biofuel Production

Rs. 1,00,000

Annualised Capital Cost of Plantations/Biofuel

Rs. 48,555

Annualised O&M Cost of Biofuel

Rs. 52, 000

Qunatity of Oilseeds Crushed

15, 000 Kg

Quantity of Biofuel (25%)

3,750 Liters

Auxiliary Consumption in Expellers

675 Liters

Net Biofuel available for sale

3,075 Liter

Sale price of oil

Rs. 18 per liter

Quantity of Oil Cake (70%)

10, 500 Kg

Sale Price Oil Cake

Rs. 3 per Kg

Other Assumptions


to be contributed by the village

Soft Loan

3% interest rate

10 years repayment

Improved Cookstoves

Excluded from the analysis

Capacity building (Rs. 1.5 Lakh per village)

Excluded from the analysis, to come from Govt. grant

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Energy Production System

100% loan

70% grant

30% loan

90% grant

10% loan

100% grant


Annualized Capital Cost (Rs.)

42, 705

12, 811

4, 270


Annualised O&M Cost (Rs.)

24, 000

24, 000

24, 000

24, 000

Total annual Cost (Rs.)

66, 705

36, 811

28, 270

24, 000

Tariff (Rs. Per hh/month for 60 households)





Electricity System Domestic / Community Load

Annualized Capital Cost (Rs.)

88, 452




Annualised O&M Cost (Rs.)

71, 327

71, 327

71, 327

71, 327

Total annual Cost (Rs.)

1, 59, 779

97, 863

80, 172

71, 327

Annual Consumption (KWh)

35, 837

35, 837

35, 837

35, 837

Tariff (Rs. Per hh/month for 100 households)





Irrigation / Rural Industry Loads

Annualized Capital Cost (Rs.)

34, 398

10, 319

3, 440


Annualized O&M Cost (Rs.)

27, 738

27, 738

27, 738

27, 738

Total annual Cost (Rs.)

62, 136

38, 057

31, 178

27, 738

Annual Consumption (KWh)

14, 250

14, 250

14, 250

14, 250

Tariff (Rs. Per KW/h)





Plantations / Biofuel

Annualized Capital Cost (Rs.)


14, 566

4, 855


Annualized O&M Cost (Rs.)

52, 000

52, 000

52, 000

52, 000

Total annual Cost (Rs.)

1, 00, 555

66, 566


52, 000

Annual Revenue (Rs. )

86, 850

86, 850

86, 850

86, 850

Total Deficit / Surplus (Rs. )

(-) 13, 705

(+) 20, 284

(+) 29,995

(+) 34, 850

Deficit / Surplus (per hh/month) ( Rs. )

(-) 11.42

(+) 16.90

(+) 24.99

(+) 29.04

Total Tariff (Rs. )

i) 60 families including biogas





ii) 40 families excluding biogas





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