Overhaul India's power sector strategy, shift to decentralised systems, insists policy analyst

By A Representative 
On the eve of India's 80th Independence Day, a prominent policy analyst has released a comprehensive report urging a fundamental strategic reassessment of the country's electricity sector. The proposal, submitted to the Union Ministries of Power, New and Renewable Energy, Finance, and NITI Aayog, advocates for a decisive pivot from the traditional "capacity expansion" model to a "system optimisation" paradigm centred on distributed renewable energy (DRE).
In his communication, analyst Shankar Sharma argues that India's power sector is at a "defining moment." While acknowledging remarkable progress in electrification and renewable capacity, he highlights that the conventional model of large, centralised projects is becoming environmentally, socially, and economically unsustainable. This shift, he argues, is crucial to meet India's climate commitments and ensure the financial sustainability of its power sector.
The report's central thesis proposes a new strategic hierarchy for meeting India's growing energy needs. It recommends that before any new large-scale generation is planned, all opportunities for energy efficiency, demand-side management, local renewable resources, and storage should be fully evaluated. This approach, Sharma suggests, would minimise ecological damage, reduce financial stress on distribution companies, and create a more resilient system in the face of escalating climate risks.
The timing of this appeal is significant, as the government is currently finalising the draft National Electricity Policy (NEP) 2026. The new policy targets increasing per capita power consumption to 4,000 kWh by 2047, a goal that will require a massive expansion of the grid and generation capacity . While the NEP 2026 already recognises the importance of distributed resources and proposes measures like the establishment of a Distribution System Operator (DSO) to integrate DRE, the analyst's proposal suggests a more accelerated and central role for these technologies.
Sharma's recommendations come amidst a backdrop of rapid growth in the DRE sector. The Ministry of New and Renewable Energy recently reported that distributed schemes such as PM Surya Ghar and PM-KUSUM are on track to reduce states' electricity subsidy burden by ₹2.4 lakh crore by adding nearly 18 GW of DRE capacity in the last 15 months . The government has also amended electricity rules to strengthen captive power generation, a move that encourages industries to generate power closer to their point of consumption, aligning with the push for greater decentralisation.
The analyst's report concludes by framing the proposed shift as more than just an energy transition. "It is a national strategy for sustainable economic development, energy security, climate resilience, ecological protection and inclusive prosperity," the report states. This appeal, echoing the challenges of persistent discom debt and high industrial tariffs, underscores the ongoing debate on how to balance economic growth with sustainability as India charts its energy future.