Electric Utilities

Traditionally, electricity is generated through power sources and supplied to consumers via the power grid. Distribution utility companies, also known as discoms, supply this energy to consumers at fixed rates. India has a large capacity for power generation with generation increasing at a CAGR of 8.9% from 124GW to 344GW between 2006 and 2018.

Distribution companies in India face myriad challenges and as a result, the electricity distribution sub-sector is often considered to be the weakest link in the overall power sector value chain. But the distribution sector has seen significant improvements in the last few years. overall peak and energy demand deficits have significantly reduced; there has been a gradual decrease in AT&C losses, i.e., losses from technical and commercial inefficiencies; and tariff revisions that have led to a reduction in the gap between the average cost of supply and average revenue realized, among others .

With clean technologies growing in importance, distribution companies are also being expected to take on additional responsibilities like providing electric vehicle infrastructure, incorporating more renewable energy into the grid, and helping the government accelerate the growth of the solar rooftop sector among other concerns. These responsibilities come with additional technical and operational challenges. Open access, which enables eligible consumers to procure power at competitive price to meet their demand, from suppliers other than the distribution companies is another critical concern that distribution companies in India are contending with.

Many reforms have been introduced by the government to improve the health of distribution utilities. The Ujwal DISCOM Assurance Yojana (UDAY) is a flagship scheme by the government of India that envisages financial turnaround, operational improvement, reduction of cost of generation of power, development of renewable energy and energy efficiency and conservation for a strong distribution sector . Smart metering and digitalisation of processes are also being pushed in order to improve the financial and operational viability of distribution companies. However, more remains to be accomplished in order to ensure optimal discom health, which in turn can lead to an improved electricity supply system for India.

Shakti Sustainable Energy Foundation works with several stakeholders across the country including Central Government entities, state level stakeholders and utilities to strengthen demand side management (DSM) and facilitate distribution sector reforms.