The power distribution sector in India plays a critical role in ensuring reliable electricity access to nearly 250 million consumers. This network is managed by 73 state/UT licensees, 13 private distribution companies (discoms) and eight franchisees. The country has achieved remarkable milestones, including 100 per cent household electrification and near 24-hour power supply, driven by key initiatives such as the Integrated Power Development Scheme, Deendayal Upadhyaya Gram Jyoti Yojana and Ujwal Discom Assurance Yojana.
To further strengthen the sector, the government launched the Rs 3,040 billion Revamped Distribution Sector Scheme (RDSS). Under this initiative, 17.1 million smart meters have been installed and 180,000 feeders have been integrated into the National Feeder Monitoring System. The sector has also witnessed crucial policy reforms. The Late Payment Surcharge Rules have significantly reduced overdue payments from Rs 1,295.84 billion in September 2022 to Rs 372.78 billion by February 2024. In addition, the Electricity Amendment Rules, 2024 introduced collective responsibility, time-of-day (ToD) tariffs, revised charges and measures to improve the financial health of discoms. Furthermore, the Central Electricity Authority’s Rs 7,420 billion Distribution Perspective Plan lays emphasis on smart systems, as demonstrated by Varanasi’s pilot project aimed at enhancing grid reliability.
At Power Line’s 19th annual conference on Power Distribution in India, senior executives from private discoms and regulators discussed the current status, policies, challenges and opportunities in the power distribution sector. A summary of the key discussions from the conference…
Progress so far
RDDS
The RDSS has significantly impacted the financial and operational performance of discoms. The ACS-ARR gap (average cost of supply-average revenue realised) reduced from Rs 0.85 per unit in financial year 2021 to Rs 0.45 per unit in financial year 2023. Subsidy disbursal reached 108 per cent, supported by Rs 436 billion in state subsidies. Aggregate technical and commercial (AT&C) losses declined to 15.4 per cent in financial year 2023, while collection efficiency remained strong at 97.3 per cent. Several utilities improved their performance by over 10 per cent.
Smart metering has been a key focus. Of the 197.9 million consumer smart meters targeted, 57 per cent have been awarded and 3.4 per cent have been installed. Assam, Bihar and Madhya Pradesh accounted for 72 per cent of the installations. Of the distribution transformer meters, 86 per cent have been awarded, and 3.5 per cent installed, with Maharashtra and Assam leading progress. For feeder meters, 73 per cent have been awarded, and 30 per cent installed, with Maharashtra and Uttar Pradesh responsible for 60 per cent of installations.
Furthermore, discoms like KSEB and Uttar Gujarat Vij Company Limited (UGVCL) (whose senior spokespersons spoke at the conference) have shown notable improvements. KSEB reduced its AT&C losses to 7.55 per cent in 2023-24 and reported a surplus of Rs 0.38 per kWh in 2022-23. It is now focused on achieving a break-even target of Rs 0 per kWh for 2024-25. Initiatives include strengthening infrastructure, deploying smart meters and piloting drone-based inspections. UGVCL has reduced interruptions, ensured 24×7 power for industrial feeders (accounting for 60 per cent of revenue) and provided 10-hour reliable power to agricultural feeders. It also leads Gujarat’s smart metering efforts with 150,000 installations, improving billing and collection efficiency.
Smart metering and smart grid initiatives
The National Smart Grid Mission (NSGM) aims to modernise the power distribution system in two phases – up to 2026 and then until 2030. Key projects include the expansion of distribution transformer metering, SCADA implementation, asset mapping, transformer monitoring, smart street lighting, energy storage, charging stations, drone-based management, and distributed energy resource systems. Furthermore, demand response programmes are being implemented. Consumers can participate in incentive-based programmes (where they are compensated for load reduction) and price-based programmes (including time-of-use (ToU) pricing and real-time pricing).
Smart metering and advanced metering infrastructure have become a core part of the strategy. At the state level, Assam has made notable strides by gradually transitioning from postpaid to prepaid metering. Bihar has successfully reduced its AT&C losses from 34 per cent to 19 per cent, with around 30 per cent of the meters installed. Approximately 190 million meters have been tendered, of which over 140 million tenders have already been concluded. Key players like IntelliSmart have installed 1.5 million smart meters, with significant efforts seen in Assam, Bihar and Madhya Pradesh. This shift is driving financial and operational improvements.
Perspective of private discoms
Private discoms are working to meet the rising power demand, particularly in rural and underdeveloped areas, by expanding their networks and integrating solar power. To handle growing load densities, they are upgrading infrastructure, such as deploying dedicated 11 kV cable systems in industrial parks. Issues like auto-switching and auto-tripping have prompted enhancements in protection systems. Additionally, discoms are adopting data analytics and artificial intelligence for grid optimisation, fault detection and asset management, aiming to improve reliability and operational efficiency.
Minimising outages and ensuring N-1 redundancy have become critical priorities, especially as even short power cuts impact consumers significantly. Advanced technologies like wide-area management systems, although costly and complex, are being explored to prevent fault escalation, reduce restoration times and enhance network reliability. However, material shortages, rising procurement costs and the need for robust infrastructure pose significant challenges.
Perspective of regulators
Regulators play a pivotal role in ensuring efficiency in the distribution segment by issuing timely tariff orders, enabling licensees to recover costs and operate effectively. Regulatory support is crucial for infrastructure upgrades, including advanced meters and improved networks. The introduction of ToD tariffs aims to optimise load management and renewable energy integration, but consumer awareness remains a challenge. Green tariffs, while promising, face uncertainties regarding consumer acceptance. The conference hosted a session with regulators from Gujarat and Delhi.
In Gujarat, net metering has significantly increased solar energy adoption, lowering procurement costs and losses for both consumers and licensees. The state’s private discoms report minimal distribution losses, while public ones maintain losses below 10 per cent. Smart meters and ToD tariffs are assisting consumers in optimising energy use, while green tariffs encourage the industrial adoption of renewables.
In Delhi, smart metering and timely billing are essential for managing its large consumer base. While the city is transitioning to renewables, slow rooftop solar adoption remains a challenge. Litigation delays in tariff orders have raised regulatory assets and costs. The gradual implementation of smart meters is expected to enhance grid operations, enable fraud detection, and support ToU tariffs under the capex model.
Challenges and the way forward
Despite policy and technology advancements in this space, significant challenges persist in India’s power distribution segment. Financially, discoms struggle with rising power and fuel costs, which they cannot fully pass on to consumers. The gross debt of state-owned discoms surpassed Rs 6.5 trillion in fiscal year 2023, with Tamil Nadu, Maharashtra, Uttar Pradesh and Rajasthan accounting for 55 per cent of the debt.
Moreover, the implementation of RDSS faces field execution delays, non-adherence to parameters, and logistical challenges in the Northeast due to difficult terrain and skilled manpower shortages. Consumer resistance to prepaid metering and concerns about data privacy, cybersecurity and interoperability are other significant issues. To address these, discoms are focusing on technology-driven data collection, consumer engagement and the establishment of robust cybersecurity protocols.
Smart grid implementation also entails challenges such as consumer resistance, communication technology issues, meter reading errors and energy audit discrepancies. Further, renewable energy integration presents technical difficulties such as generation variability, supply-demand balancing and voltage management.
The deployment of smart meters also faces significant challenges. Currently, installations range from 7,000 to 8,000 meters per day. Key challenges hindering the deployment of smart meters include consumer resistance, especially in low-income or rural areas, as well as implementation difficulties related to logistical, technical and other operational issues.
Overall, India’s power distribution sector stands at a critical juncture, balancing financial recovery with modernisation demands. While initiatives like the RDSS and NSGM have improved performance, sustained success will require a multifaceted approach. Key measures include enhancing productivity, minimising transmission and distribution losses, and aligning tariffs with the true cost of power supply. Further, structural reforms such as unbundling the electricity supply chain and advancing the privatisation of power generation and distribution will be essential for creating a more efficient, competitive and sustainable energy ecosystem.