This paper presents the results of a study undertaken for identifying niche areas in India where renewable energy based decentralized generation options can be financially more attractive as compared to grid extension for providing electricity. The cost of delivering electricity in remote areas considering cost of generation of electricity and also cost of its transmission and distribution in the country have been estimated. Considering electricity generated from coal thermal power plants, the delivered cost of electricity in remote areas, located in the distance range of 5-25 km is found to vary from Rs. 3.18/kWh to Rs. 231.14/kWh depending on peak electrical load up to 100 kW and load factor. The paper concludes that micro-hydro, dual fuel biomass gasifier systems, small wind electric generators and photovoltaic systems could be financially attractive as compared to grid extension for providing access to electricity in small remote villages. (C) 2008 Elsevier Ltd. All rights reserved.