India needs a grid revolution | Expert Views

This is a result of deliberate action over the last decade — financial incentives for renewable energy (RE) deployment and integration, competitive auctions to discover market-reflective prices, and the introduction of new electricity trading platforms for energy and ancillary services. As a result, we are not only building capacity but greening the electricity that reaches millions of consumers. Non-fossil sources now make up one-fourth of India’s annual electricity generation, with their share momentarily crossing 50 per cent during the daytime in July 2025 and again in July 2026. This signals a lasting change in the supply mix. But the race only gets tougher now.

Here are three major obstacles: One, existing grids are inflexible, built for one-way electricity flows. Two, transmission lines are slow to build while renewables can be installed faster. And three, markets pay only for energy, not the other high-value grid services essential for a reliable power system. Without fundamental reforms that help overcome these obstacles, the risks of stalling investments in new clean energy, stranded generation capacities, and costly technology lock-ins remain real. Research by the Council on Energy, Environment and Water shows that a high-RE pathway is essential for India to reliably meet its rising electricity demand at the lowest cost. But that will be contingent on our ability to expand and modernise grids, set up frameworks that guide procurement of energy services at least cost, and formalise markets that reward flexibility.

The transition ahead demands that we shift our attention from the visible spectacle of capacity addition to the invisible architecture of grid management and power markets. The greening of India’s power grid will be decided in the offices of our ministries, utilities and regulators: Those responsible for keeping the world’s third-largest power system running and where the real work of integrating renewable energy into a reliable, resilient system must play out hourly, daily, seasonally and annually.

First, rapidly add flexible and advanced grid-enhancing technologies. India’s storage capacities are not commensurate with its renewable energy penetration: 1 Gw battery is supporting about 60 Gw solar and wind in India versus 4-13 Gw in Australia, United States, and China. Available reserve capacity is also now running thin. As a result, excess daytime renewable energy is being curtailed despite high electricity demand after sunset. Traditional ways of expansion and upgrades will not suffice. We need targeted interventions: Reconductoring of existing transmission lines to evacuate more power with the same infrastructure, enhancing reserves beyond central generating stations by enabling flexible operations of the state-owned thermal fleet, mandating grid-forming inverters through grid codes, and co-location of battery storage with existing and new RE capacities on mission mode.

Second, rethink market design to attract investments in flexible resources and enhance trade through markets. Most power generated in India is traded through 25-year bilateral contracts, with each utility deciding its own operational schedules for contracted generators close to real-time. This practice has led to inefficient resource use and an under-developed wholesale market, making RE integration costly. India must test new ways to attract buyers and sellers to the wholesale market that pays competitive rates for varied services on offer. Regulators should start with introducing short-term capacity markets by bringing centrally-allocated thermal capacities into the fold, and deepening gradually. New market-based instruments like the recently-launched Contracts-for-Difference pilot and carefully-designed variants could help attract investments in merchant projects selling clean power when utilities need it most. Only when markets exclusively reward capacity, energy and dispatchability would investments flow at scale.

Third, redesign power procurement frameworks for least-cost delivery. Today, India conducts technology-specific auctions, with thermal, solar, wind, and  RE with storage — all mainstream options — competing within their own categories. However, the market is ripe for cross-technology competition to test least-cost outcomes for utilities and consumers. Driven by integrated power system planning, utilities must specify the services they need over the next 10-15 years — capacity, flexibility, grid stability — and allow competition on merit. The Ministry of Power and the Central Electricity Regulatory Commission must encourage innovative tender and contract designs that enable procurers to evaluate bids across technologies and make informed choices.

Fourth, and perhaps most critically, we must enable rapid digitalisation of the grid network. Discoms are critical nodes in the power grid, yet many still lack visibility on how consumers are using electricity, health of the distribution network assets and the impact of rooftop solar and electric vehicles. Smart meters, deployed responsibly, could be the foundation in generating such intelligence, alongside nudging consumers to alter their electricity use when the grid is under stress. Regulators must work with discoms to utilise smart meter data to roll out appropriate time-varying tariff options for consumers to choose from. Unified consumer-facing apps that make real-time electricity prices and granular consumption visible must take equal priority.

Electrons do not recognise the boundaries we draw between transmission and distribution. They flow according to the physics of the grid, agnostic to the architecture of our institutions or power purchase contracts. If India builds renewable capacity without reforming how the grid operates, we will have spent trillions of rupees on solar panels that cannot be fully utilised and wind turbines that must be curtailed because the system cannot absorb their output.

The women running small enterprises powered by solar dryers, the farmers irrigating their fields with solar pumps, the millions of households who deserve reliable, affordable, clean electricity — they are the ultimate stakeholders in this transition. The green grid India builds will have to deliver for them as well. India has shown the world what is possible when we marry ambition with execution. The next chapter of our energy story must be written not in megawatts added but in megawatts integrated — capacity built and capacity utilised. That story begins in the field but scales only through policy, planning, technology and fit-for-purpose power markets of the future.

The writers are, respectively, CEO and fellow at the Council on Energy, Environment and Water.