The past one year was marked by some significant developments, from transformative policies such as the PM Surya Ghar Muft Bijli Yojana (PM-SGMBY) to the rapid expansion of renewable energy capacity. However, bottlenecks in storage solutions, regulatory uncertainties and delays in tenders posed challenges. Looking ahead to 2025, opportunities in energy storage, grid modernisation, distribution privatisation and carbon trading are expected to put a spotlight on the sector. Industry experts shared their views on the highs and lows of 2024 and their outlook for the year ahead…
What were the major hits and misses in the power sector in 2024?
Somit Dasgupta
The budget of 2024-25 has given a hike to a number of schemes, which would help in energy transition. Amongst the more prominent schemes are the PM-SGMBY, PM-Kusum Scheme and also the National Green Hydrogen Mission. The moot point is whether the budgetary provisions are adequate, especially for the Green Hydrogen Mission. If we spread our resources very thin, it will not have the desired effect. Other initiatives mentioned in the budget include promoting of research and development of small modular nuclear reactors, devising a carbon trading scheme, and expanding the list of capital goods used for domestic production of solar cells/panels where customs duty would not be levied. Customs duty has been done away with on 25 identified critical minerals. The budget also provides for a green energy corridor. While all these initiatives may bear fruit in the long run, some other policy measures will adversely affect the growth of renewable capacity, almost instantly. The re-introduction of the Approved List of Models and Manufacturers in April 2024 and the imposition of basic customs duty for solar cells and modules are two classic examples. If we are interested in keeping our solar tariffs low, both these policy decisions must be reviewed.
Vikas Gaba and Manas Tiwari
One of the biggest hits for the power sector in 2024 was increased impetus and capital outlay for energy transition. Several initiatives were rolled out by the government, including the Rs 750 billion PM-SGMBY, which will provide direct capital subsidy of up to 60 per cent for the installation of rooftop solar systems up to 3 kW. The scheme benefits are multi-pronged as it will help in affordable and reliable power to 10 million households, reduce the tariff subsidy load on discoms and facilitate the energy transition. Another critical step toward energy security as well as clean energy transition has been the plan to deploy 220 MW Bharat Small Reactors and Bharat Small Modular Reactors along with increased spend on research and development for advanced nuclear technologies. This step will help India fast-track the deployment of cost-effective nuclear energy, using indigenous technology.
A crucial step taken on ground is the Electricity (Amendment) Rules, 2024. One of the marquee rules being the delicensing of dedicated transmission lines for gencos, captive plants, energy storage systems and consumers over specific loads, for connectivity with the grid. This is a significant step for debottlenecking the constraints in open access and gird connectivity as well as for promoting private investments in transmission infrastructure. The 2024 rules have other far-reaching directives as well, such as the elimination of the gap between annual revenue requirement and estimated revenue except in case of natural calamity, capping of revenue gap (if any) at 3 per cent and liquidation of the existing revenue gap within seven years.
Meanwhile, an important milestone that we missed again this year is the Electricity Amendment Bill 2022. One of the most critical matters in the bill pertains to retail competition and it has been on the anvil for over a decade now. While the government has tried to take different approaches ranging from carriage and content segregation to delicensing to parallel licensing, we are yet to make any headway. Retail competition is vital at this moment, to bring in long pending reforms in the distribution segment, to bring in operational efficiency, improved consumer services and reduced financial burden on state governments.
Satyajit Ganguly
The vision of our policymakers, as well as the intent of our regulators toward expanding the role of power markets in the country is very clear. This has also been made evident in the Ministry of Power’s (MoP’s) report titled “Development of Electricity Market in India” that provides a roadmap for transforming the power market/transaction structure of the country.
India has adopted a “multi-power exchange” model in 2008, with a view to encouraging competition among exchanges and catering to the growing and varying requirements of market participants. Over the past 15 years, the transacted volume in power exchanges has increased manyfold, with the introduction of different contracts in multiple segments, for example, day-ahead market (DAM), real-time market (RTM), contingency markets, term-ahead market, green day-ahead market (G-DAM), high price day-ahead market (HP-DAM), renewable energy certificate (REC) market, energy savings certificate (ESCert) market, etc., resulting in nearly 8 per cent of the electricity being transacted through the power exchange platform in financial year 2023-24.
However, the “multi-power exchange” model has resulted in different prices being discovered in the same market due to varying order books at each power exchange. To overcome this scenario, the Central Electricity Regulatory Commission (CERC) introduced provisions of “Market Coupling” in the CERC (Power Market) Regulations, 2021, enabling uniform price discovery in DAM or RTM or any other contract operating in power exchanges. Later, the CERC, vide order dated February 6, 2024 has directed GRID-India to “implement shadow pilot on power system and cost optimisation through market coupling” comprising coupling of RTM of the three power exchanges, RTM and security constrained economic despatch (SCED) and DAM of three power exchanges for a period of four months after development of the necessary algorithm. The four-month phase of shadow pilot is yet to commence, our members/clients and other stakeholders are closely following the new developments in the “Market Coupling” framework and are regularly seeking updates on this new market design.
Recently, the CERC issued a draft regulation for transaction in carbon credit certificates (CCCs), with the aim to create an efficient and credible CCC market that will accelerate decarbonisation efforts by all stakeholders, positioning India at the forefront of climate risk mitigation.
With various initiatives in the pipeline, the breadth and depth of markets is expected to increase manyfold over the next few years.
Debabrata Ghosh
The rapid expansion of renewables capacity continues, with 15 GW of solar PV installed in the first half of the year, exceeding all previous records. In May 2024, a record peak demand of 250 GW was met. Battery tenders have also gained momentum this year, with 2,500 MW/5,000 MWh tendered, including GUVNL’s first-of-its-kind eight-hour battery tender. Additionally, there has been continued progress in transmission buildout, especially in the ISTS (central transmission network).
Areas for further improvement include continuing momentum on power market reforms, especially on explicit capacity market and ancillary services reforms. Exploring policy options to decouple the wholesale/exchange price cap from retail price cap is essential—accelerating renewable (especially wind and battery storage) buildout by tweaking the existing exchange-traded price cap, while insulating end consumers from price shocks. While there has been a record-breaking transmission capacity expansion as well as an ambitious future plan laid out by the government, it is critical to ensure forward thinking on congestion in potential choke points in the system.
Sharad Pungalia
India’s renewable energy sector achieved remarkable milestones in 2024. The country crossed the 200 GW renewable energy capacity mark, showcasing the combined impact of progressive policymaking and a committed industry. However, challenges persist. Transmission infrastructure remains a critical bottleneck, as the capacity to wheel the significant power being generated still lags behind the pace of renewable energy development. Furthermore, the energy storage policy must take centre stage. Without a robust framework to integrate storage solutions, India’s goal of greater relevance in the global renewable energy market could face hurdles. Another key concern to address is the slow pace of land and environmental clearances, which continues to impact project timelines. Strengthening regulatory certainty and accelerating these processes could unlock further growth and investment. In summary, while 2024 was a landmark year, addressing transmission, storage and regulatory challenges will be vital for sustaining this momentum and achieving long-term energy goals.
Debmalya Sen
We have done extremely well in 2024 with reference to new tenders being brought in by different tendering agencies, with Solar Energy Corporation of India (SECI) driving it from the front. The quantum of renewable energy capacity tendered in the year has been noteworthy, while it has been the most successful year in terms of energy storage development. The year saw 1.7x times the capacity tendered in 2023 and was also the most successful year in terms of the same being closed. A significant drop in battery costs has also resulted in discoveries of new L1s across the spectrum for renewable energy hybrids, firm and despatchable renewable energy (FDRE), solar+storage, pumped hydro and stand-alone batteries, which witnessed a more than 65 per cent drop in tariffs. These innovative concepts are now competing well with other generating sources in the grid, while beating many in the race.
What has not worked well, or rather has not stood up to expectations has been the conversion of tenders to execution. While the country is moving forward to its highest annual renewable energy installation capacity in 2024, it still significantly lags the required rate of installations required annually, to achieve 500 GW of capacity from non-fossil fuel energy sources by 2030. There is an increasing delay in projects getting awarded to them finding a buyer, specifically for such tenders where the off-taker is not identified. There have been instances where off-takers too have backed off after tariff discovery. For batteries where there is a drop expected in tariffs in every next bid, the rising concern is discoms also have been apprehensive to sign contracts in expectation of a lower tariff discovery in the next tender. This is a rising concern, which in the long run, will not be helping anyone in the value chain. A delayed power purchase agreement (PPA) only means a further deviation for the country as a whole from achieving its 2030 goals.
Ashish Tandon
Since my work primarily focuses on the power distribution ecosystem, I will centre my discussion on that domain.
Major hits: One of the key achievements in 2024 was the significant progress made under the Revamped Distribution Sector Scheme (RDSS). This scheme aims to deploy 250 million smart meters nationwide, improving the quality, reliability and affordability of power supply to consumers by ensuring financially sustainable and operationally efficient discoms. It also targets the reduction of aggregate technical and commercial losses to 12-15 per cent and elimination of the average cost of supply-average revenue realised gap. Of the 2.5 million smart meters, contracts for approximately 1.3 million have already been awarded, with the rest in various stages of procurement. A remarkable development in the deployment of advanced metering infrastructure (AMI) has been achieved, with IT backbones established for nearly all awarded projects. Our efforts in executing AMI projects using the DBFOOT (design, build, finance, own, operate and transfer) model have led to enhanced operational efficiencies and improved consumer satisfaction. Evidence in the public domain underscores benefits of smart meters for both consumers
as well as discoms.
The other major achievement has been the launch of PM-SGMBY, which has received overwhelming response. As of December 2024, there have been 14.8 million registrations, 2.8 million applications received and 0.5 million installations done, with subsidies of approximately Rs 34 billion released. This can largely be attributed to the consumer-driven demand as well as the significant push from the government, including nationwide campaigns and subsidies for consumers.
Another noteworthy achievement has been industry collaboration. Through forums such as the Indian Electrical and Electronics Manufacturers’ Association, Confederation of Indian Industry, India Smart Grid Forum and others, we have contributed to shaping policies and standards for smart metering, addressing deployment challenges and developing more informed roll-out strategies.
Misses: Despite achievements, challenges persist. While smart meter deployment has begun, misconceptions about smart meters persist among consumers, which affects their confidence. To catalyse further deployment, comprehensive nationwide consumer awareness programmes are essential, as has been done in the case of PM-SGMBY.
Another area requiring attention is the resolution of issues faced during smart meter deployment. A well-structured redressal mechanism is necessary to address challenges such as discrepancies in interpretations and undefined scopes, ensuring timely resolution, clarity in roles and seamless coordination among stakeholders.
What will be some key trends to watch for in 2025?
Somit Dasgupta
There are a number of ways of looking at this. If one is watching India’s progress towards net-zero by 2070, then phasing out of coal is important as the power sector contributes to about 40 per cent of the total carbon emissions. Unfortunately, at present, we are going in the opposite direction because of slow addition of renewable capacity and also because of limited storage capability. We need to add about 40 GW of renewable capacity every year from now till 2030, to meet our demand but we have been achieving not even half of this. Having said that, renewable energy capacity growth is not the only metric to watch. Some of the key parameters necessary for energy transition include adopting smart grid technology, managing meter data, introducing electricity derivatives, especially in the futures market, devising and adopting a low-cost financing model, developing a robust transmission system, especially green corridors, etc.
Vikas Gaba and Manas Tiwari
The flagship scheme of the MoP, RDSS, has a sunset date of March 2026. The scheme is ambitious and more result-oriented than earlier schemes. It will be interesting to see the on-ground results of the scheme in the coming year. Additionally, the MoP had rolled out the Smart Power Distribution initiative for Varanasi, under the ambit of RDSS. The Smart Power Distribution focuses on automation and modernisation of the distribution network, along with the adoption of frontier technologies such as artificial intelligence (AI)/machine learning based analytics, IoT-based asset management, drone-based survey, blockchain, etc. It will be good to see a wider coverage of several other smart cities under this initiative.
Uttar Pradesh has recently proposed restructuring of two of its five state discoms. The plan involves a fresh approach of splitting discoms into smaller parts and operating newly created discoms under the public-private partnership (PPP) model. Since 2003, we have seen limited success, with privatisation or PPP model in distribution. The last one was Odisha in 2020 and another attempt at privatisation of utilities in union territories has remained in abeyance due to legal challenges. Therefore, successful restructuring and privatisation of Uttar Pradesh discoms will be an important milestone to watch out for.
We also need to watch out for the Indian Carbon Market Framework, which is under development and is expected to be launched in 2025. The market will involve compliance, offset and trading mechanisms, which will help us meet our climate change goals. For the power sector, the framework can further propel energy transition through a faster shift to clean energy sources.
Satyajit Ganguly
The government is prioritising a transition to sustainable and clean energy sources to support its Nationally Determined Contributions and net-zero goals. This transition includes integrating renewables, exploring nuclear energy and utilising biofuels, despite challenges such as renewable intermittency, waste management and the impact of biofuels on food security. The Indian government has set itself the target to achieve at least 500 GW of non-fossil fuel installed capacity, which includes 280 GW of solar power and 140 GW of wind power projects, by 2030. As of October 31, 2024, the renewable energy capacity is 203 GW, including 47 GW of large hydro. This means that India will need an average annual addition of about 40-50 GW of installed renewable capacity over the next few years.
To address challenges in the transition to sustainable and clean energy sources, a diversified energy strategy, including smart mix of renewables combined with storage systems, nuclear, bio-fuels and the combined use of thermal power is essential to ensure energy security, while minimising operational risks.
In the power exchange space, in the foreseeable future, we expect a significant increase in digital transactions and the introduction of many new contracts deepening the power markets. Power exchanges would be introducing new contracts related to the carbon market, capacity market, market-based economic despatch, secondary reserve ancillary services, etc., adding diversity and scale to their existing offerings. The expanding role of power markets will go a long way in addressing the issue of clean, reliable and quality power supply to consumers at affordable costs.
Debabrata Ghosh
The move towards merchant/exchange-traded power will create new opportunities for developers and investors looking to build complex portfolios, unlocking higher internal rate of returns (IRRs), but also requiring more sophisticated capability building. The rapidly expanding FDRE tenders will drive an increase in exchange-traded volumes, becoming a key differentiator in the market. Cost declines for batteries will make upcoming tenders increasingly competitive; for example, relative to SECI ESS 2 in September 2024, GUVNL Phase 4 in November 2024 saw a 40 per cent cost decline. Further indigenisation of the Indian green energy supply chain is being enabled by the Indian government’s policy measures and tariff measures by the US. There is also scope for Indian discoms to optimise (green) power sourcing costs by better sourcing a mix of long-term PPAs and merchant/exchange-traded power.
Sharad Pungalia
The year 2025 will be a defining one for India’s renewable energy sector, driven by advancements in energy storage and digital technologies. Energy storage, particularly battery innovations and hybrid systems, will be key to enabling reliable, round-the-clock renewable power. Policy reforms and infrastructure improvement in this area can address critical challenges, unlocking growth potential. With continued momentum in decentralised solutions such as rooftop solar, India is set to strengthen its position as a global renewable energy leader in 2025. The combination of innovation, policy support and market demand will create a powerful growth trajectory for the sector.
Debmalya Sen
A busier tendering period for energy storage-linked tenders is expected, comprising a mix of FDREs, stand-alone ESS and solar+battery energy storage systems (BESS) projects, in addition to the plain vanilla renewable energy tenders. A further drop in renewable energy+ESS and stand-alone ESS costs is anticipated, driven primarily by a decline in battery costs expected in 2025. The year 2025 will mark a significant milestone as India witnesses the large-scale commissioning of grid BESS, with a total of 2.3 GWh of capacity expected to come online. There is also a rising trend of storage-coupled renewable energy tenders replacing the erstwhile plain vanilla tenders, especially for solar. Additionally, more innovation in battery technology is anticipated not only with more technologies narrowing the price premium but also with advancements in energy density, efficiency, cell capacity and other parameters.
Ashish Tandon
I am optimistic about 2025, which promises to be an exciting year for the power sector. Key trends to watch include the following.
- Smart metering revolution: The RDSS roll-out will likely scale up significantly, with a greater focus on consumer engagement and leveraging data analytics to improve operational efficiencies.
- Decentralisation of energy systems: As renewable energy installations increase, PM-SGMBY will play a significant role in driving the need for decentralised energy systems. Advanced metering solutions will be essential for managing distributed energy resources effectively. As renewable energy penetration increases, the focus will shift to advanced storage solutions to address intermittency challenges.
- Integration of utilities: There is a growing emphasis on integrating energy metering with water and gas systems to create a unified utility management framework in urban areas. This will enhance resource efficiency, improve service delivery and support smart city development.
- AI and predictive analysis using meter data: AI-powered analytics leveraging smart meter data will redefine utilities in 2025. Predictive maintenance, load forecasting and fault detection will optimise operations, reduce energy losses and empower consumers with tailored tariffs and real-time insights. Integration with renewable energy and enhanced theft detection will drive sustainability and create a smarter, more efficient energy ecosystem.
- Private sector participation: Growing interest from private players in distribution reforms and PPPs will shape the future trajectory of the sector.
- Net-zero targets: Smart meter deployment will play a critical role in achieving India’s net-zero goals by enabling better energy management, optimising resource consumption and reducing carbon footprints. Similarly, solar metering under initiatives such as PM-SGMBY will support clean energy generation, driving progress towards net-zero targets.
- Integration of RDSS and PM-SGMBY: The synchronisation of RDSS and PM-SGMBY will provide additional benefits to consumers, particularly in empowering households to generate and manage their own energy. While PM-SGMBY operates in a pull mode, with consumers actively seeking solar solutions, RDSS remains in a push mode. Bridging this gap through coordinated efforts can enhance consumer adoption and ensure benefits on ground. I am confident that significant efforts toward this integration will be made in the coming year.
What will be the sector’s oppurtunities and growth drivers in 2025?
Somit Dasgupta
It is generally felt that one of the key reasons for slow growth of renewable capacity in India is on account of the imbalance in risk adoption. As things stand today, the entire risk is borne by the developer, who, in most cases, is a private entity. The developer bears the risk of land acquisition, faces difficulties in grid connectivity and very often, does not receive payments on time from discoms. To promote the growth of renewable capacity, the government has to share the risk burden. The government ought to assist in land acquisition, which would help in reducing the discovered price and further, ensure timely payments from discoms, which are mostly publicly-owned companies. Another important growth driver as far as renewables is concerned is the availability of storage facility. A number of policy measures have been announced in the past two years to promote storage and hopefully, they will bear fruit
over time.
Vikas Gaba and Manas Tiwari
Renewable energy will remain a growth driver for the sector since we have a target of 500 GW renewable energy capacity by 2030 and we currently stand at ~210 GW (including large hydro). As energy storage systems are vital to renewable energy integration, grid reliability and the overall energy transition, we should also see increased adoption of BESSs. Also, the Production Linked Incentive Scheme, viability gap funding support as well as delicensing of BESS installation and transmission connectivity should all culminate in improved viability and increased investments in this area.
In addition, smart grid technologies and digitalisation is a growth area, not just for 2025 but for the foreseeable future. While the government already supports both these areas through initiatives such as RDSS, we need much more investment in this area, especially smart grid technologies such as supervisory control and data acquisition and advanced distribution management system since these are capital intensive. Besides, there are numerous digital technologies that can be implemented across the power sector and not all are capital intensive. For instance, AI/ML-based analytics solutions for demand/forecasting and power portfolio optimisation are economical considering the benefits they offer, but the adoption across discoms is yet low. Similarly, there are established use cases for technologies such as demand response and IoT-based asset management, which have been adopted by many leading global utilities at scale and should be adopted by Indian utilities for efficient functioning and more reliable supply.
Satyajit Ganguly
We are witnessing a very interesting time right now, with significant policy initiatives being taken to drive forward the power sector in India. In addition to a series of steps being taken to drive the sector forward, there is a focused drive to enhance the efficiencies of the sector by utilising market frameworks. The power markets, especially power exchanges, are a key instrument across this drive toward enhancing efficiency for all consumers in the country.
Many power sector reforms are being introduced by the government to bring efficiency, promote decarbonisation and ensure a 24×7 reliable and affordable power supply. The “Shadow Plot on Market Coupling” will eventually be implemented for coupling of RTM with SCED, coupling of DAM and coupling of DAM with security constrained unit commitment in the near future.
In order to move towards a greener economy, the Carbon Credit Trading Scheme (CCTS) was notified by the MoP in June 2022, with an objective to involve corporate and private sectors in energy saving and carbon emission reductions. The Bureau of Energy Efficiency, in July 2024, has notified the “detailed procedure for compliance mechanism under CCTS”. Recently, the CERC issued draft regulations on CCCs, inviting stakeholder consultation; the notification of the final regulation will enable Power Exchange India Limited (PXIL) to seek approval for the introduction of CCC contracts.
The introduction of the carbon market will pave the way for large-scale promotion of clean energy technologies in India, leading to the de-carbonisation of the Indian economy through active participation by various stakeholders. With the successful operation of REC and ESCert markets by power exchanges over the past 13 years, the exchanges are poised to play a significant role in the carbon market development.
We have a highly supportive policy and regulatory environment today and a lot of opportunities to serve the marketplace through a wide variety of contracts of various tenures and catering to various segments of the market. Furthermore, the market-based economic despatch and regulatory provisions such as market coupling, once implemented, would further enhance the competitive efficiencies of the power market.
Ultimately, the exchanges are marketplaces, where the buyer and seller can efficiently and transparently manage their portfolios better and we, from PXIL, continue to strive to make that experience better for all our participants every day.
Debabrata Ghosh
The move towards merchant/exchange-traded power will create new opportunities for developers and investors to build complex portfolios, unlocking higher IRRs but also requiring more sophisticated capability building. The rapidly expanding FDRE tenders will drive an increase in exchange-traded volumes, becoming a key differentiator in the market. Cost declines for batteries will make upcoming tenders increasingly competitive; for example, relative to SECI ESS 2 in September 2024, GUVNL Phase 4 in November 2024 saw a 40 per cent cost decline. Further, indigenisation of the Indian green energy supply chain is being enabled by the government’s policy measures. Additionally, there is scope for Indian discoms to optimise green power sourcing costs by better sourcing a mix of long-term PPAs and merchant/exchange-traded power.
Debmalya Sen
Opportunity and growth drivers: Addressing peak demand through renewable energy+ESS as against gas peakers. The decliningwith the decreasing cost of batteries is facilitating a move from two-hour storage to four-hour storage much faster than expected. Increasing renewable energy capacity coming online year-on-year presents greater opportunity and demand for ESS. More FDREs will also mean greater market transactions, including merchant, power exchange and open access.
Ashish Tandon
Several opportunities and growth drivers stand out for 2025:
- Government initiatives: Continued support from schemes such as RDSS will drive the expansion of smart metering. Achieving 100 per cent smart meter coverage in both urban and rural areas will be a major growth driver.
- Export potential: India’s expertise in cost-competitive smart meter solutions has created rising international demand, presenting a significant opportunity for exports. Further, having witnessed this massive smart meter deployment, Indian industries are well placed to replicate the same in Asian and African markets.
- Energy transition: The global push for sustainability and reduction of carbon footprint will drive demand for technologies supporting renewable energy integration, with smart meters playing a pivotal role.
- Electrification of mobility: The expanding electric vehicle ecosystem will require upgraded charging infrastructure and grid enhancements, unlocking new business avenues.
