For millions of consumers across the country, electricity arrives through a familiar pipeline: the local power distribution companies, universally known as Discoms. From these utilities, everyday consumers expect a round-the-clock, reliable supply of power to keep homes, businesses, and industries running without interruption. While a select few Discoms are successfully meeting this high standard, many others are making uneven progress, lagging behind in operational efficiency. Traditionally, these utilities have managed to supply power primarily by entering into long-term procurement contracts with thermal power projects. Yet, the persistent and critical challenge facing Discoms has always been their financial health. Restoring solvency requires achieving meaningful efficiency gains, cutting aggregate technical and commercial losses, and securing cost-reflective tariffs that mirror the actual expenses of power delivery.
However, a fundamental and disruptive energy transition is now gathering rapid momentum, demanding that Discoms thoroughly reengineer their operational models. With the rapidly rising share of cheap solar power flooding the energy landscape, Discoms were expected to proactively arrange for adequate storage capacities. This crucial step is necessary to ensure that generation from solar plants is never curtailed—a practice that threatens grid stability and wastes valuable clean energy. Unfortunately, many utilities failed to make these necessary preparations, leading to widespread curtailment of solar power. This year alone, over 8.1 gigawatt-hours of solar power have been curtailed, translating to an entirely avoidable economic loss exceeding 20 billion rupees. Unless Discoms wake up to this reality and begin aggressively inviting bids for energy storage systems to capture excess generation, these losses will continue to compound.
Recent market developments highlight just how outdated traditional procurement strategies have become. In a recent competitive bid for round-the-clock supply of renewable energy coupled with storage, the successful bidder offered a tariff of just Rs 5.25 per unit. Remarkably, this price is lower than the market rate for newly built thermal power plants. Furthermore, under the terms of such agreements, this price remains locked and does not rise for 25 years. When adjusted for inflation over that extended horizon, the real cost drops to approximately Rs 3.7 per unit—a financial proposition that would have been completely inconceivable just a decade ago.
Given these transformative economics, Discoms must immediately stop contracting for new thermal power capacity, as electricity generated from coal is proving to be significantly more expensive. Both the state distribution companies and their respective State Electricity Commissions need to align themselves with this new market reality. The historical argument regarding the nation’s right to utilize its abundant domestic coal reserves becomes entirely irrelevant when a cleaner, cheaper option for supplying electricity is readily available in the market.
Despite the clear economic advantages, persistent apprehensions and misleading arguments frequently emerge in favor of maintaining the status quo, pushing back against a fundamental transformation of the power sector. Skeptics often raise fundamental questions, beginning with whether the nation actually possesses sufficient solar power potential to meet all future increases in demand. The answer is an emphatic yes. The government has steadily raised its national estimate to over 3,000 gigawatts, whereas total installed power capacity from all sources is currently approaching 600 gigawatts. Furthermore, an independent estimate by The Energy and Resources Institute has placed the nation’s solar potential at over 10,000 gigawatts, proving that resource availability is not a bottleneck.
Another common concern questions the practical feasibility of building out all the necessary energy storage infrastructure required to back up intermittent renewables. In reality, battery storage technology prices have been on a steady downward trajectory globally, and utility-scale battery installations typically take only about a year to deploy. At the same time, the development of pumped storage hydro projects has gained momentum. The identified potential for pumped storage on rivers across the country exceeds 100 gigawatts, while off-river sites offer potential capacity that is likely many times larger. These off-river sites can easily be estimated and identified using modern satellite imagery. Additionally, the potential for concentrated solar thermal power equipped with integrated storage is of a similar order of magnitude to traditional large-scale solar photovoltaic projects, as both rely fundamentally on direct solar radiation.
Critics also point to the operational challenges posed by overcast days when solar generation drops precipitously. Fortunately, the country now operates an integrated, nationwide synchronous grid, meaning that a sudden generation shortfall in one regional pocket can be seamlessly made up by drawing surplus power from another interconnected area. As the share of solar power scales up significantly from its current level of over 10 percent to more than 50 percent, some extra capacity will naturally be needed to serve as a strategic cushion.
Furthermore, the daily and seasonal variations in electricity demand are continuing to shift. Intra-day variations in load can be effectively managed by scaling up energy storage systems. Meanwhile, the optimal structural solution for handling seasonal variations is to maintain thermal power capacity that is specifically designed to operate only during the peak summer months when electricity demand surges due to residential and commercial air conditioning. Going forward, these specific thermal plants can be engineered and built to run entirely on renewable bioenergy sources, utilizing biogas derived from cow dung, biofuels processed from sugarcane molasses, and briquettes manufactured from agricultural crop residues.
As initial pilot plants begin operating and scaling up, these biowaste options will naturally become more cost-effective. After all, agricultural and animal biowaste represents a fundamentally free, renewable source of energy. Discoms should actively invite competitive bids for the supply of electricity generated from plants utilizing biowaste to provide essential peaking power. While the cost of collecting and preparing biowaste is relatively low, the expenses associated with transporting heavy organic material can be high. Consequently, small, decentralized biowaste power plants may ultimately prove to be much cheaper than large centralized units.
In a competitive market, prices invariably tend to decline, but this specific market for biowaste and peaking power must first be consciously created by the Discoms themselves. To procure peaking power efficiently, utilities need to continuously assess future demand patterns—ideally on a granular, hourly basis for every month of the year—and invite targeted bids for reliable supply. Through this process, transparent time-of-day pricing for the wholesale purchase of peaking power by Discoms will naturally emerge.
Implementing time-of-day pricing for end-use consumers, which accurately reflects the actual economic costs of generation and storage, represents the next logical step in this evolution. Such a pricing structure would empower everyday consumers to significantly reduce their monthly electricity bills by shifting portions of their energy consumption to hours when market prices are low. In the modern digital age, aided by the widespread rollout of smart meters, this dynamic interaction is becoming easier with each passing day.
For instance, household appliances such as freezers, refrigerators, and air conditioning units can be programmed to allow indoor temperatures to rise slightly by two degrees when electricity prices are high, and lower them by two degrees when prices drop, without causing any noticeable difference in human comfort. Similarly, water heaters and washing machines can be automated to run during hours when electricity prices hit their lowest levels.
In this rapidly shifting global energy landscape, adhering to business-as-usual practices is no longer a viable option for India’s power distribution companies. Discoms must adapt to the changing times proactively; otherwise, the quality of their power supply will inevitably decline, leaving ordinary consumers to shoulder financial burdens higher than what is necessary.
