Turning Around the Power Distribution Sector

The Indian power sector has evolved rapidly over the past few decades. The country has electrified every village and transformed from a power-deficit to a power-surplus nation, led by a remarkable growth in renewable energy deployment.

As the country has made transitions in the power sector, new challenges have emerged around quality of access, decarbonization, and renewable energy integration. It is critical for India to address these challenges in order to transition to a clean and sustainable energy future.

This report describes a set of pathways to guide distribution companies (discoms) on their path forward to unlock enhanced financial and operational performance while increasing their adoption of clean energy technologies.

Most discoms incur significant losses every year, constraining their ability to modernize and transform. Poor finance and operations also restrain their role as credible offtaker of electricity – affecting the economics of generation companies. This inhibits investments required to ensure always-on, reliable, and high-quality power and to facilitate the transition from fossil fuels to renewable energy.

A robust and long-lasting solution to the woes of the discoms will require changes in policy as well as organizational, managerial, and technological reforms. Different states have travelled along different pathways of reforms providing a rich set of policy experiments to learn from.

Such cross-learnings need to be supplemented by a micro-level approach to de-risking the politics of electricity reforms by employing localized experiments and pilots to inform the viability of techno-economic and techno-policy solutions at the ground level. It will become even more critical as discoms move toward grid-modernization and increase their clean energy portfolios.