Electricity Systems and Digitalisation in India

November 29, 2022

The changing electricity landscape

India is witnessing a major shift in its electricity systems with 25% of the installed power capacity renewable as of 2022 and plans to ramp up this capacity from the current 150 GW to 450 GW in 2030 which would then account for 50% of the installed power capacity. 1 Another noticeable trend is that of local based ( distributed ) solar, wind, biomass generators, fuel cells and other decentralised generation systems picking up. This results in a proliferation of ‘prosumers’ - using and generating their own energy.

Installed Power Capacity1

While this is great news for our climate goals, this shift poses significant integration challenges for the electricity system. Electricity supply and demand need to be perfectly balanced for the safe delivery of electricity. Traditionally, fossil fuel-based synchronous generation could guarantee this balance by adapting to the levels of demand in a given period simply by turning up or the amount of fuel to be burnt. However, more the non-synchronous renewable energy in the system (where the level of electricity is dependent on wind/solar resource in a given moment), the less the generation side can reliably guarantee this balance. This imbalance is becoming particularly fatal as  renewable energy penetration is highly variable by state in India. The share of solar and wind in India’s ten renewables-rich states is significantly higher than the national average. In fact, some states ( Karnataka, Rajasthan, Tamil Nadu, Gujrat ) already have a higher share of variable renewable energy (VRE) than most countries internationally. As a result, many states are already facing system integration challenges.

Moreover, with the increasingly distributed nature of energy generation and consumption, traditional shortcomings such as high transmission losses and challenges in billing, metering and collection become more prominent.


Digital  solutions ( AI / Analytics / Blockchain and IoT ) and Storage Solutions are two of the technologies that can ride on the trends of increasing renewable and distributed energy and alleviate the challenges of flexibility and integration of RE outlined above. In this blog, we talk about the digital solutions that we believe can innovate to shape the future of this space.

Energy Assets Optimisation

Digital solutions can enhance efficiency across the lifecycle of renewable energy generation particularly in installation and O&M.

   1.  Installation

As costs of renewable energy assets’ components is decreasing, cost focus is shifting to optimising designs for energy efficiency and ROI.

Technology :

- Digital simulation that can model multiple designs and scenarios, including variables such as weather, off-takers demand volatility, and local infrastructure (current and future), optimising each design to maximise return on investment and minimise risk.

- CRM solutions for price quotes

Tailwinds: Increased topographical challenges and the addition of newer REs ( with unproven design ) such as hydrogen and offshore wind create the need for innovation in simulation and design.

  2. O&M

Efficiency in O&M is gaining importance as RE becomes more critical to the electricity supply making unplanned downtimes and lower generation costlier.


-Inspection using Drones: Drones can automate and significantly reduce the time for inspection and provide more granular detail such as geotags and thermal information of default locations.

-Robots for Cleaning: Robots enable the cleaning of RE assets at a higher frequency and reduce water consumption.

-AI and Digital Twins: A digital twin is a virtual system embedded with machine learning tools that act as a replica of the actual physical asset and predicts the faults within the system to alert the O&M team - enabling proactive measures.

Market :

Currently renewable energy O&M costs upto $10k/MW 2 in a year. With 450 GW  of installed capacity in 2030, this would cumulates to a total of $4.5 billion in annual O&M costs in India. Approximately 50% of this costs is currently in manpower which can be displaced by technology.

P2P Energy Trading

Increasing need for electricity in consumer’s everyday life, such as electrification of mobility, increases demand in the periphery of the central grids. Furthermore, 100 million households in India are still not connected to the international grid. On the other hand, decentralised and intermittent renewable energy generation creates a reverse flow of distributed energy. The current system would struggle to deal with these developments and lead to higher energy bills, increased investment costs, and more complex challenges.

Technology :  P2P energy trading can be implemented over the national grid as well as on independent grids via:

-Aggregation software ( bundling and controlling resources – such as rooftop solar PV, home batteries, cooling equipment, demand response, EV charging stations ), offering functions meant to mimic those of a traditional power plant control room.

-Blockchain enabling smart contracts for payments and transaction ledgers

Headwinds : High Investment Costs with unstable revenue risks for micro grids.


Energy Consumption Efficiency

While proliferation of RE sources and prosumers are recent trends, monitoring and proactively managing electricity consumption is a time tested way to regulate energy consumption as well as to save in operating costs.

It is particularly critical for the Commerce and Industry ( C&I ) sector that contributes to 50% of the electricity demand in India 3 and pays higher tariffs to cross subside the residential and agricultural sectors. Managing energy consumption becomes more involved as C&I experiment with newer sources of electricity to storage such as solar+battery++ solutions.

On the residential front, cooling is expected to be the largest source of residential demand growth in the next two decades in India, with air conditioner stock expected to climb from 30 million today to 670 million in 2040 owing to rising urban temperatures and per capita incomes.4 Owing to such trends, there would be an increased need to manage our residential electricity consumption smartly as well.


-Energy monitoring and analytics across various equipments and machines

-Monitoring battery systems usage and optimising battery life

-Integrating electricity from open access sources and grid sources


  1. IBEF Renewable Energy
  2. Tata Power on O&M Costs
  3. Crisil on C&I electricity demand
  4. India Energy Outlook 2021