Rural Outreach

Gram UJALA to provide affordable LED bulbs in villages financed by carbon credits

The government recently launched the Gram Unnat Jyoti by Affordable Lighting for All (UJALA) programme – an ambitious scheme to provide the world’s cheapest light emitting diode (LED) bulbs in rural areas. This unique and innovative programme is based on carbon finance. Under this programme, Convergence Energy Services Limited (CESL), a wholly owned subsidiary of Energy Efficiency Services Limited (EESL), will distribute high quality LED bulbs, at an affordable price of Rs 10 per bulb in rural areas, in exchange for the old incandescent lamp bulbs in working condition. The Gram UJALA programme will be financed entirely through carbon credits and will be the first such programme in India.

A look at the scheme and its provisions…

Background

The government’s UJALA scheme had cut LED bulb prices to Rs 70 per piece from Rs 310 in 2014. However, it was observed that less than one-fifth or only 18 per cent of the 360 million LED bulbs distributed under the UJALA scheme were in rural areas. This indicates the rural consumers’ inability to pay even the discounted price of Rs 70 per LED bulb. In view of this, the Gram UJALA programme has been launched as the UJALA programme could not cover every village.

In August 2020, EESL announced its plans to offer 600 million LED bulbs in rural areas at Rs 10 per piece, without any government support or subsidy. EESL decided to register the Gram UJALA scheme under the United Nations’ Clean Development Mechanism, enabling it to claim carbon credits. The revenue earned from carbon credits will contribute Rs 60 per LED bulb, with the balance Rs 10 to be paid by the rural consumer.

Key provisions and features

Under the programme, 7 Watt and 12 Watt LED bulbs with a three-year warranty will be given to rural consumers against the submission of working incandescent bulbs. In the first phase of the programme, 15 million LED bulbs will be distributed across villages in the Aarah (Bihar), Varanasi (Uttar Pradesh), Vijayawada (Andhra Pradesh) and Nagpur (Maharashtra) areas, as well as in a village in western Gujarat. Consumers can exchange up to five LED bulbs.

The Gram UJALA programme is expected to give a fillip to the action against climate change by increasing energy efficiency, as a 12 Watt LED bulb gives light equivalent to a 100 Watt incandescent bulb. The programme will generate energy savings of 2,025 million kWh per year and CO2 reductions of 1.65 million tonnes per year. Besides enabling better illumination, at an affordable price, the programme will usher in a better standard of life, financial savings, more economic activity and improved safety for rural citizens.

Rural households will have meters installed in their houses to account for their usage. The carbon credit documentation will be sent to UN-accredited validators for inclusion in the Shine Programme of Activities, which involves the distribution of LEDs. Carbon credits will be prepared under this programme with an option for verifying under the voluntary carbon standard, depending on the needs of buyers. Carbon credit buyers will also be sought through an open process, based on initial discussions with the market. The balance cost and margin on the LED cost will be recouped through the carbon credits earned.

Expected outcome

According to EESL, India offers a compelling reason for investment in combating climate change. In developed economies, while it takes an investment of $100-$200 for the reduction of 1 tonne of greenhouse gases, in India, the investment is pegged at $10-$40 for the reduction of the same quantum of greenhouse gases.

The Gram UJALA programme has been designed to support the widespread distribution of LEDs by removing the principal price barrier for rural consumers. In addition, the energy savings garnered are expected to reduce the energy outlay of households enabling higher disposable income and savings, besides reducing the dependence on fossil fuels. The programme will provide clean energy access and make a significant contribution towards mitigating climate change and achieving a sustainable future. The programme is a landmark in consolidating India’s leadership in energy transition and energy efficiency. Over time, these low-priced LED bulbs will be able to leverage scale and achieve economy,  and give an impetus to the  Make in India initiative as well as India’s climate change strategy. w

Nikita Gupta

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