In Short : India’s clean energy transition could accelerate with greater clarity in power pricing. Removing cross-subsidies, simplifying tariffs, and reflecting true grid and storage costs would attract more investment in renewables. Transparent pricing would enable efficient dispatch, support grid upgrades, and enhance investor confidence—helping India meet its 500 GW renewable energy goal and long-term net-zero commitment by 2070.
In Detail : India’s transition to clean energy is being slowed by a lack of clarity in electricity pricing. Current tariff structures rely heavily on cross-subsidies, where industrial and commercial users pay more to offset lower prices for residential and agricultural consumers. This system strains the finances of power distribution companies (DISCOMs) and discourages much-needed investment in grid modernization.
Opaque and complex charges, such as demand fees and peak-hour tariffs, further distort the true cost of electricity. These hidden costs discourage industries and businesses from adopting renewable energy, as seen in recent objections raised by manufacturers in Maharashtra. Greater transparency in tariff structures could provide accurate price signals and drive more sustainable energy choices.
While the cost of solar and wind power has fallen below that of coal on a levelized basis, integration and storage costs still favor fossil fuels in many scenarios. Transparent and reflective pricing across the entire power system—including backup, balancing, and transmission—would reveal the real competitiveness of renewables and help displace coal more effectively.
Improving tariff structures would also incentivize investments in critical infrastructure such as battery storage, pumped hydro, and transmission upgrades. These assets are essential for managing the intermittency of renewables and ensuring reliable power delivery. Without appropriate pricing reforms, such upgrades remain financially unviable or delayed.
Digitalization of the power grid, modeled on India’s UPI success, could improve efficiency and enable real-time energy dispatch. A more dynamic and responsive grid system, supported by modern regulatory frameworks and financially healthy DISCOMs, would boost the integration of renewable energy and reduce losses.
With India’s power demand expected to triple by 2050, the urgency for reform is growing. Clear, cost-reflective pricing will attract greater private investment, foster innovation, and ensure that the clean energy transition is both economically and socially sustainable. It will also play a vital role in achieving India’s 500 GW renewable energy target and net-zero goal by 2070.
