Although it is clear that there are links between access to modern energy carriers and economic development, the necessary understanding of these links is lacking. Research in literature shows mixed results. This paper studies the mechanisms that link energy supply and impacts on income generation. Empirical data from 264 small scale enterprises in 16 clusters of villages in the Indian Himalayas is analysed. The steps between energy supply and impacts on enterprise are stratified, studying actual energy use of energy services. The analysis shows that for the majority of typical enterprises in rural areas, which are informal enterprises with less than 6 workers, the impacts on incomes are low even though the uptake of electricity in enterprises is high. The key factor influencing impacts on incomes is limitations in access to markets for enterprise products, especially social access. For most small scale rural entrepreneurs the main impacts of energy access are on wellbeing. The findings are discussed to come to policy recommendations in the field of energy supply and complementary fields to achieving positive impacts on rural development. (C) 2011 Elsevier Ltd. All rights reserved.