India has announced aggressive decarbonisation plans to meet Prime Minister (PM) Narendra Modi’s pledge of net-zero carbon emissions by 2070; many of these plans — especially short-term actions — are tied to the power sector. While India has achieved success in expanding renewable energy supply, such as wind and solar power, a persistent challenge has been electricity distribution companies (discoms), the last leg in the chain of electricity. Most of these in India are owned by state governments, and persistently suffer from high losses, both of energy and financially.
Because discoms are regulated entities in India, with almost all consumer prices set by independent state electricity regulatory commissions, in theory, they should not be loss-making, unless they fail to perform. And while they do have high aggregate technical and commercial (AT&C) losses, a pair of unique financial studies at the Centre for Social and Economic Progress (CSEP) shows that discom non-performance is not the root cause of their financial losses. The problem is more complex and systemic.
