How Distributed Solar Can Reinvigorate India’s Electricity Distribution Companies

This briefing by RMI explores how distributed solar, particularly rooftop solar (RTS) and decentralized renewable energy (DRE), can alleviate the financial distress of India's electricity distribution companies (Discoms) while helping the country meet its 2030 renewable energy targets and modernize its grid.

• Distributed solar can reduce the financial burden on Discoms by solarizing subsidized domestic and agricultural consumers, who currently pay tariffs lower than the average cost of supply. This shift helps mitigate the cross-subsidy burden placed on commercial and industrial (C&I) consumers, who are increasingly migrating to low-cost renewable energy pathways. Additionally, solarizing government buildings by 2025 can reduce outstanding dues to Discoms.
• Agricultural solarization offers significant cost reductions in power procurement and transmission losses. A major project in Maharashtra aiming for 9 GW of distributed RE capacity is expected to reduce the state's power purchase costs by 45 percent, resulting in INR 1 trillion (US$15.38 billion) in savings over 25 years.
• The PM Surya Ghar scheme, which aims to solarize 10 million households by covering nearly 60 percent of system costs, could lead to 30 GW of cumulative deployment. This would represent over 10 percent of India's 2030 solar target of 280 GW and nearly 50 percent of the 2030 DRE renewable energy purchase obligation (RPO) target of 63 GW.
• Distributed solar can help states with limited land or renewable resources meet their RPO targets, which require 4.5 percent of electricity consumption to be met via DRE by 2030. As of 2023, 25 states had less than 30 percent RPO compliance.
• Integrating distributed solar with batteries can enable Virtual Power Plants (VPPs) to shave peak demand, allowing Discoms to avoid expensive power procurement from marginal generators or exchanges. The document cites US examples in Massachusetts and Hawaii where VPPs provide cash incentives to consumers for sharing stored energy.
• Discom-led models have proven successful in specific Indian states: in Kerala, 66 percent of total solar capacity is rooftop solar due to the state's limited land area, while Gujarat accounts for nearly 30 percent of India's total rooftop solar deployment through Discom efforts in digitalization and consumer awareness.

APA

RMI (2024). How Distributed Solar Can Reinvigorate India’s Electricity Distribution Companies. https://rmi.org/resources/how-distributed-solar-can-reinvigorate-indias-electricity-distribution-companies/

Chicago

RMI. How Distributed Solar Can Reinvigorate India’s Electricity Distribution Companies. 2024. https://rmi.org/resources/how-distributed-solar-can-reinvigorate-indias-electricity-distribution-companies/.

Wikipedia

{{cite report |author=RMI |title=How Distributed Solar Can Reinvigorate India’s Electricity Distribution Companies |date=27 May 2024 |url=https://rmi.org/resources/how-distributed-solar-can-reinvigorate-indias-electricity-distribution-companies/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2024how, author = {{RMI}}, title = {{How Distributed Solar Can Reinvigorate India’s Electricity Distribution Companies}}, institution = {RMI}, year = {2024}, month = may, url = {https://rmi.org/resources/how-distributed-solar-can-reinvigorate-indias-electricity-distribution-companies/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }