How Distributed Solar Can Reinvigorate India’s Electricity Distribution Companies

The briefing examines how distributed solar, particularly through schemes like PM Surya Ghar and PM-KUSUM, can mitigate the financial distress of Indian Discoms by reducing the cost of supplying subsidized consumers and lowering power procurement costs. It highlights the potential for distributed solar to contribute significantly to India's 2030 renewable energy purchase obligations (RPO) and suggests that the adoption of virtual power plants (VPPs) and battery storage could further modernize the grid and manage peak demand.

• Distributed solar can reduce the financial burden on Discoms by solarizing subsidized domestic and agricultural consumers, who currently pay tariffs lower than the cost of supply. This helps shrink the gap between revenue and costs and reduces the cross-subsidy burden placed on commercial and industrial (C&I) consumers.
• The PM Surya Ghar scheme, which aims to solarize 10 million households and covers nearly 60 percent of system costs, could lead to a cumulative deployment of 30 GW. This would represent over 10 percent of India's 2030 solar target of 280 GW and nearly 50 percent of the 2030 decentralized renewable energy (DRE) RPO target of 63 GW.
• Solarization of the agricultural sector can significantly lower costs; for example, a project in Maharashtra aiming for 9 GW of distributed RE capacity is expected to reduce power purchase costs in the state by 45 percent, resulting in INR 1 trillion (US$15.38 billion) in savings over 25 years.
• The adoption of virtual power plants (VPPs) and battery storage can help Discoms manage peak demand and avoid expensive power procurement from less efficient generators. The document cites US examples in Massachusetts and Hawaii where VPPs could reduce peak demand by 60 GW by 2030.
• State-led models in Kerala and Gujarat demonstrate the effectiveness of Discom-driven deployment. In Kerala, 66 percent of total solar capacity comes from rooftop solar, while Gujarat accounts for nearly 30 percent of India's total rooftop solar deployment.

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} }