




































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; 
c.debalina12@gmail.com, debalina.chakravarty@sxuk.edu.in  

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; joyashreeju@gmail.com, joyashree@ait.asia. 

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  

 

 

mailto:c.debalina12@gmail.com
mailto:debalina.chakravarty@sxuk.edu.in
mailto:joyashreeju@gmail.com
mailto:joyashree@ait.asia
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 

                                                        
3Solar irradiance 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  

Reference
s Actors  

Producer 
& 

distribut
or 

End-user Other 

Benefits 

Economic 

Low cost 
of raw 
energy, 
reduces 

transmissi
on loss 

Planned 
electricity 

consumption 

Local 
employment 
generation, 
economic 

development 

Dieckman
n 2013; 

Chen et al. 
2011 

Social  

Improvement
s in health, 
study time, 

cooking time, 
communal 

activities, etc. 

 

Fowlie et 
al. 2018; 
World 

Bank 2008 

Environme
ntal 

Less greenhouse gas (GHG) emissions, less 
local pollution, less non-renewable energy 

use 
 

Dieckman
n 2013; 

Kamel et 
al. 2015; 
Molina 

and 
Mercado 

2010; 
Vachirasri
cirikul and 
Ngamroo 

2011 

Barriers 

Lack of 
improved 
technolog

ies, 
efficient 
monitori

ng 
systems, 

and 
expertise 

Higher 
electricity 

tariffs 

Regulatory 
barriers 

CEA 
2012; 

Chakravart
y 2016 

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  

                                                        
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 
cultivated  

Pulses Barley, wheat, 
gram, pulses, and 
oil seeds 

Wheat, rice, 
pulses, and jute 

Main source of 
livelihood 

Cultivation and 
labour 

Cultivation Cultivation 

Average monthly 
family expenditure 

$97.5  

(₹6,142.5)  

$50  

(₹3,200) 

$18–21  

(₹1,175–1,350) 

Gender ratio 
(Female: male) 

666:1000 861:1000 940:1000 

Literacy rate Very low  
(2% 
approximately) 

61.44% 74% 

Predominant 
material of the wall 

Mud and unburnt 
bricks 

Stone: packed 
with mortar 

Burnt brick 

Predominant 
material of the roof 

Asbestos cement Stone/slate Concrete 

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 

Energy service 
Lighting 

(illumination) 
Space-cooling 

Other energy 
services 

Pre-solar 
microgrid 
electricity 

access 

Solar panel with a 
domestic lantern 
system (4 hr/day) 

[90%] 

None [0%] 
(Personal hand fan 

only) 

None  
[0%] 

Post-solar 
microgrid 
electricity 

access 

Solar microgrid electricity [77%] 
(24 hrs/day) 

Change in 
usage 

Consumption 
increased [77%] 

New electric 
ceiling fans 

installed 
[65%] 

Buttermilk 
machines and 

televisions were 
purchased and 

installed in 5% of 
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  

Energy 
sources 

Domesti
c solar 
panel 

lighting 
systems 

Solar microgrid electricity 

Time of 
access 
(hrs) 

4 24 

Annualize
d cost per 

kWh 
energy 

($) 

 
0.95* 
0.74** 

 
0.64* 
0.59** 

Services 
provided 

Lighting 
only 

Lightin
g 

Coolin
g 

Entertainme
nt 

Cooking Other 

Appliance
s in use 

Solar 
lamp 

CFL, 
night 
bulb 

Fan, 
cooler 

Television, 
radio, DVD 

player 

Buttermil
k 

machine 

Mobile 
chargin

g 

Duration 
of use in a 
household  
(hrs/day)   

 4 

4-6 
(CFL) 
3–5 

(night 
bulb) 

2–6 
(fan) 
2–4 

(cooler
) 

2–4 
(television) 

1–1.5 2–4 

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 
efficient 
electrification 

Yes 
(% of 

responses) 

No 
(% of 

responses) 

Don't know 
(% of 

responses) 

Indoor environment 
becomes less smoky 

100% 0% 0% 

Increase in demand 
for lighting/cooling 

100% 0% 0% 

Increase in study time 
for children 

100% 0% 0% 

More time allocation 
for daily primary jobs 
like cultivation  

100% 0% 0% 

Better livelihood 
practices with 
electricity 

100% 0% 0% 

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% 
discount 

rate) 

(At 5% 
discount 

rate) 

Implication of 
estimated rebound 

effect 

For illumination services 151% 165% Presence of the 
frontier effect 

For all the available 
energy services 

192% 199% Presence of the 
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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[89] Debalina Chakravarty and Joyashree Roy 

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 

  
------------------------------------------------------- 

 
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 
used14 (in the 
last 3 months) 

Amount of fuel used 
(specify the unit) 
(per month) 

Expenditure on fuel 
used (in INR) (per 
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 
used15 (in the 
last 3 months) 

Amount of fuel used 
(specify the unit) 
(per month) 

Expenditure on fuel 
used (in INR) (per 
month) 

Lighting    

   

Space cooling    

   

 
13. Total electricity consumption pattern:16  
 

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. 

 Months  Units consumed Expenditure on electricity (in INR) 

June   

May   

April   

March   

February   

January   



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

15.  Consumption pattern of appliances: 

Service Specification Wattage 
consumption 

Hours 
in use 
in 
summer 

Hours 
in use 
in 
winter 

First 
cost/ 
capital 
cost 

Remark/other 
details 

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 
cooling 

Ceiling fan 
(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! 
 


