Implementation of a digital energy grid in India is a complex undertaking marked by technical and regulatory challenges: Saurabh Kumar of Global Energy Alliance for People and Planet

• What are the key advantages and challenges of Distributed Renewable Energy systems in rural India?

Distributed Renewable Energy (DRE) technologies such as solar mini-grids, rooftop/home systems, solar pumps and microgrids are revolutionising rural India by providing clean, localised energy. They provide reliable, clean power to communities that are often underserved by the central grid, supporting livelihoods, education, and healthcare.

Yet sustainable scale-up is not without its challenges. Upfront high capex deters commercial finance; variable state-level mini-grid regulations and different tariff regimes ensure policy uncertainty; and a lack of trained local technicians ensures maintenance delays and downtime. Conquering these challenges will demand coordinated national guidelines, creative financing mechanisms, and focused capacity-building so that DRE can be a trusted, sustainable backbone to India’s rural energy future.

• In what ways can DRE initiatives support India’s goals under the Nationally Determined Contributions (NDCs) and Sustainable Development Goals (SDGs)?

DRE initiatives are central to India’s commitments under the Paris Agreement and the Sustainable Development Goals (SDGs). By expanding access to clean energy, DRE directly supports SDG 7 (Affordable and Clean Energy), while also contributing to SDG 13 (Climate Action). Long-term access to a dependable energy source via DRE solutions helps women become more self-reliant, augmenting women-led micro enterprises and ensuring energy access, thereby contributing to SDG 5 (Gender Equality)

According to India’s revised NDCs, the nation has the target of 50% cumulative electric power installed capacity from non-fossil fuels by 2030. DRE is a primary facilitator for realising this, especially in rural and hard-to-reach areas, where extension of the centralised grid is difficult. DRE also contributes to emission reduction and climate impact resilience enhancement, in support of India’s overall climate and development goals. 

• What are some innovative financing models that can accelerate the adoption of DRE technologies by smallholder farmers and SMEs?

Accelerating the adoption of DRE technologies by smallholder farmers and SMEs requires financing models that are affordable, accessible and tailored to the unique needs of these users.

• Pay-as-you-go: Under this model, user make small, incremental payments to access DRE solutions (e.g., solar pumps, cold storage). It reduces upfront cost barriers and aligns payments with cash flows (e.g., post-harvest or monthly income).
• Result-Based Financing: Under this model subsidies or incentives are paid only after delivering pre-agreed outcomes (e.g., operational solar pump for 12 months). It de-risks private investment and ensures accountability and impact.
• Carbon Finance / Green Credits: Farmers and SMEs who adopt DRE solutions generate carbon credits which are monetized to reduce net costs. It makes DRE technologies more affordable while contributing to climate goals.
• Bundled Product-Service Financing: Under this model, DRE provider bundles technology (e.g., solar dryer) with services (e.g., maintenance etc.) under a subscription or EMI model. It simplifies the value proposition and ensures long-term usability.
• Community Ownership: Under this farmer’s pool resources to collectively own and manage DRE assets (e.g., community solar pump, mini grid). They share costs and risks, while promoting collective ownership & responsibility.
• Embedded Financing via Agri-Value Chains: Under this Off-takers (e.g., food processors) or aggregators finance DRE adoption by smallholders and recover cost from produce payments. It secures repayment and improves supply chain efficiency.
• Government Blended Finance Schemes: Under this model public funds are used to de-risk private capital through guarantees, interest subvention or VGF. Thus, it makes DRE projects more bankable and commercially viable.

• What are the technical and regulatory challenges in implementing a digital energy grid in India?

The implementation of a digital energy grid in India is a complex undertaking marked by several technical and regulatory challenges. A key technical hurdle is the fragmented, inconsistent baseline data across DISCOMs. Most lack geospatially accurate, asset-level digital inventories, hindering reliable network modelling. DUET addresses this by enabling end-to-end digitalisation through a technology suite that captures each grid asset’s geo-coordinates, specifications, connections and integrates them with pre-installed network sensors. Using the voltage, current and phase angle data from these sensors enables dynamic load flow analysis to support simulations and plan DRE integrations.

The lack of common data standards and the varied maturity of utility systems, such as differences in GIS structures, uneven SCADA implementation and limited integration of MDMS and OMS can pose challenges to seamless system interoperability. As DISCOMs progress through different stages of IT-OT convergence, ensuring smooth coordination across platforms is essential to unlocking the full value of digital programs like DUET.

On the regulatory front, the absence of a unified digital grid governance framework is a critical gap. While RDSS and NSGM have outlined high-level targets for grid modernisation, there is no enforceable mandate on digital twin creation, data standardization, or verification protocols. CEA has issued standards such as the Metering Regulations (2006, amended 2019) focusing on telemetry and grid interface but they do not fully address distribution-level digitalization needs like asset mapping, or network modelling leaving a gap that programs like DUET aim to fill. Unclear cost recovery models and limited institutional capacity further constrain the scalability of initiatives like DUET.

• What role do Battery Energy Storage Systems play in stabilising renewable energy supply?

The electrical grid requires demand to be matched by supply at every instant of the day. The challenge with renewable energy is that the periods of peak supply (when the sun shines or wind blows) does not coincide with periods of peak demand. Battery Energy Storage Systems (BESS) are essential for unlocking the full potential of renewable energy in India’s power mix. They stabilize the grid by storing excess solar or wind power during peak generation and releasing it during peak demand or low-generation hours. This time-shifting capability reduces curtailment, ensures availability of power, and supports grid frequency regulation. BESS is also critical for rural microgrids, enabling them to deliver reliable and uninterrupted electricity, especially in areas with inconsistent grid supply. 

• Compare different BESS technologies in terms of cost, efficiency, and scalability for rural applications.

For rural applications, lithium-ion batteries – especially LFP (lithium iron phosphate)—offer high efficiency, long life, and scalability, though upfront costs remain high for rural applications. Lead-acid batteries are cheaper and widely available, but have lower cycle life and efficiency. Flow batteries, such as vanadium redox, are promising for larger rural grids, due to their larger footprint. They offer longer duration, safer operations and easy scalability, but have higher capital costs and are less commercially mature. In terms of scalability, lithium-ion systems are modular and easier to deploy at village or microgrid scale, while flow batteries may become viable as demand for longer-duration systems grows.

Second-life batteries, repurposed from retired EV batteries, also offer a promising, cost-effective solution. These batteries, although having lost some capacity (typically around 20%), remain highly usable for stationary energy storage such as microgrids, solar home systems, and rural EV charging infrastructure. This reuse extends battery life, reduces upfront costs, and alleviates pressure on raw material supply chains.

• What are the environmental and policy considerations when scaling up battery storage infrastructure in India?

India is taking significant policy steps to accelerate battery storage deployment. MoP has announced ₹5,400 crore in Viability Gap Funding (VGF) to support 30 GWh of BESS across 15 states, in addition to the existing ₹3,700 crore VGF for 13.2 GWh already under implementation. To ensure timely execution, the scheme mandates that BESSAs/PPAs be signed within nine months of VGF announcement. Further, the government has extended 100% inter-state transmission charge waivers for BESS co-located with renewable energy until June 30, 2028 – lowering costs and improving project viability.

On the environmental front, BESS is currently not covered under India’s Environmental Impact Assessment (EIA) framework. However, as deployment scales, clear regulations will be needed to ensure developers assess and mitigate risks such as fire hazards, noise, chemical leaks, and groundwater contamination. This includes mandatory fire suppression systems, safe separation distances, and monitoring protocols. For end-of-life management, the Battery Waste Management Rules, 2022 mandate Extended Producer Responsibility (EPR), requiring producers to collect used cells and channel them to authorized recyclers through state pollution control board registration.

• How does digitalisation support energy transition goals, and what are the policy risks around data privacy and infrastructure readiness? 

Digitalisation is central to advancing India’s energy transition by enabling operational intelligence, system flexibility and localised planning—key for integrating Distributed Renewable Energy (DRE), Battery Energy Storage Systems (BESS) and demand response management (DRM). DUET exemplifies this by creating a geospatially accurate, sensor-integrated digital twin of the distribution grid. Using load flow analysis, voltage profiling and scenario simulation, the platform equips DISCOMs to assess network headroom, simulate DRE clusters and design storage dispatch strategies—capabilities absent in conventional planning models. Effective decentralized energy planning demands granular insights, often at the 11 kV feeder or DT level, to inform rooftop solar enablement, BESS siting and load shaping. DUET’s detailed mapping and digital twin foundation aligns technical feasibility with investment and policy priorities, especially in high-loss or under-electrified areas.

However, digital expansion introduces risks around data privacy, cybersecurity and infrastructure readiness. As utilities begin to digitize millions of data points, including asset identifiers, locational coordinates, operational parameters and eventually consumer usage patterns—there is no sector-specific data protection regime governing how this data is stored, accessed, or shared. While India’s Digital Personal Data Protection Act (2023) offers a general legal scaffold, its application to utility data, especially at the asset level, remains undefined. Moreover, the cyber-readiness of most DISCOMs is limited, with critical vulnerabilities in firewalling, cloud management and endpoint protection. The lack of common infrastructure standards, coupled with poor integration of smart meters, further compounds these risks. If not addressed through coordinated policy design and capacity building, these issues could delay or destabilize the long-term goals of India’s energy transition strategy.

• What policies can ensure that the clean energy transition is just and inclusive for informal workers and vulnerable communities? 

The policies that are existing that take care of the just energy transitions is the PM Suryaghar Yojana that provides 30% capital subsidy for installations upto 5 KW. In addition, the government, in association with the states and DISCOMs, is coming out with RESCO models so that these consumers do not need to invest and they get free electricity of 300 units per month by allowing solar roof tops to be installed at their roofs. Another one is PM-KUSUM that not only provides solar power to agriculture but also provides reliable power in villages at affordable rates that is benefitting micro enterprises. As we move towards a shift in fossil fuels, right policies to protect those who are involved in the fossil fuel economy need to be re-trained and provided alternate livelihoods and incomes.

• How can India leverage international climate finance to scale clean energy projects? What are the challenges in accessing such funds?

India has been accessing carbon finance that was available in the past for its clean energy – carbon finance was a key factor in this regard. There are other funds like the Clean Technology Funds, Climate Investment Funds, etc that have been used in the past and will be continued in the future as well. As India starts its domestic carbon market in 2026, such investments will increase. Also, India has been at the forefront of MDB reforms and pushing them to use their funds to leverage more private sector finance by use of guarantees, risk mitigation instruments to crowd in private capital. It is expected that such instruments will catalyse the volumes of investments that India’s clean energy transition needs in the coming years.