India’s energy transition is no longer defined solely by gigawatts added or records broken—it is increasingly being shaped by a quieter, more complex transformation: the reengineering of electricity tariffs themselves. As renewable energy scales at an unprecedented pace and the grid becomes more dynamic, decentralised, and data-driven, the very logic of how power is priced is undergoing a fundamental reset.
In this exclusive April Cover Story, we gather the visionaries steering this charge. Ratul Puri (Hindustan Power) illuminates the path from uniform pricing to dynamic, real-world dynamics; Bindu Madhavi (IESA) deconstructs the shift from a cost-plus past to a flexibility-driven “system-value” paradigm; and Samrath S. Kochar (Trontek Electronics) reveals how the rise of the ‘prosumer’ and battery storage is turning passive users into active grid guardians.
From time-of-day tariffs and storage-led pricing signals to DISCOM sustainability and emerging market mechanisms, the conversation is no longer about affordability alone—it is about aligning economics with a rapidly transforming grid. As India edges closer to its 2030 ambitions, this evolving tariff architecture will determine not just the cost of power, but the resilience of the entire energy ecosystem.
Let’s Delve deeper to explore how pricing is becoming the true engine of India’s energy transition.
How is India’s ongoing energy transition influencing electricity tariff structures across the power sector?
Ratul Puri, Chairman, Hindustan Power, said, “India’s energy transition is shifting electricity tariffs from a uniform, consumption-based model to one that reflects real grid dynamics. This means, tariffs are becoming more dynamic, transparent and aligned with system realities, a necessary shift to support scale, sustainability and grid resilience. We are moving from uniform cross-subsidised pricing toward a system that reflects the true cost of supply and the realities of a renewable-led grid. The tariffs are becoming time linked. With surplus solar power during the day and tighter supply in the evening, time-of-day pricing and peak surcharges are aligning demand with renewable availability. Then, there is a move toward cost-reflective structures. As large consumers shift to open access and captive renewables, DISCOMs are increasing fixed charges and reducing cross-subsidies to protect financial stability. Additionally, tariffs are beginning to reflect reliability and source. Green tariffs and round-the-clock renewable solutions are creating differentiated pricing based on quality of supply.”
Bindu Madhavi, Director – Policy & Regulatory, IESA, said, “Over the years, India’s energy transition is fundamentally reshaping electricity tariff structures from a cost-of-generation framework to a system-value paradigm. Traditionally, tariffs were designed around least-cost thermal power, with a focus on capacity addition and affordability. However, with the rapid growth of variable renewable energy, tariff design is now shifting toward a flexibility- and reliability-driven framework, aligned with the evolving priorities of the National Electricity Policy (Draft) and the CEA’s National Generation Adequacy Plan (2026-27 to 2035-36).
This transition can be understood across distinct phases. Prior to 2015, tariffs were largely cost-plus and capacity-centric, driven by coal-based generation. Between 2015 and 2021, India witnessed rapid renewable scale-up, with solar tariffs declining sharply through competitive bidding, yet tariffs remained largely energy-only and cost-focused. The post-2021 period marks a turning point, where declining global battery prices and increasing grid complexity led to the emergence of storage, hybrid, and round-the-clock (RTC) procurement models, signalling a shift from “cheapest power” to “usable power.”
Today, India is entering a phase where tariffs must reflect the total system cost, not just generation cost. The National Generation Adequacy Plan projects nearly 70% non-fossil capacity by 2035-36, supported by ~174 GW of energy storage, underscoring the growing importance of firm and dispatchable renewable power. As a result, tariff structures are evolving toward time-of-day pricing, hybrid tariffs, and performance-based mechanisms that value flexibility, responsiveness, and system support.
At the same time, this transition exposes new risks. India’s increasing reliance on imported technologies and critical minerals particularly for energy storage technologies introduces price volatility and supply chain uncertainties, which can directly influence future tariffs. The experience with energy storage is instructive: despite long-standing recognition of its need, adoption remained limited until global prices declined, highlighting the risks of relying solely on tariff signals for technology adoption.
Therefore, tariffs alone cannot define India’s energy transition. The emerging framework reflects a broader shift from pricing electricity based on immediate cost to valuing the overall resilience, reliability, and security of the power system. Going forward, tariff structures will serve not just as pricing tools, but as strategic signals aligned with long-term system needs, supported by policy direction and market evolution.”
Samrath S Kochar, Founder and CEO at Trontek Electronics Ltd. said, “India’s energy transition is fundamentally reshaping electricity tariff structures across the power sector as the system moves from a conventional, centralized fossil-fuel-based grid toward a more distributed and renewable-heavy power ecosystem. This shift is prompting regulators and DISCOMs to rethink how electricity is priced in order to balance grid reliability, affordability, and the integration of variable renewable energy.
To manage fluctuations in supply and optimize grid utilization, regulators are gradually introducing time-based and cost-reflective tariff mechanisms, including Time-of-Day (ToD) and dynamic pricing, which encourage consumers to shift electricity consumption to periods of higher renewable availability and reduce peak demand pressures. At the same time, the need for greater grid flexibility and reliability is highlighting the importance of technologies such as Battery Energy Storage Systems (BESS), which can store surplus renewable power and discharge it during peak demand. As storage deployment expands, tariff frameworks are expected to increasingly account for flexibility and ancillary services to support a stable low-carbon grid.
The rapid growth of distributed energy resources such as rooftop solar, EV charging infrastructure, and behind-the-meter storage is also influencing tariff design. These technologies are shifting consumers from passive electricity users to active energy participants, which requires updated tariff frameworks that account for net metering, bidirectional energy flows, and demand-side participation. As a result, utilities and regulators are exploring more granular pricing mechanisms that reward flexibility and grid-supportive behavior.”
With renewable energy capacity expanding rapidly, how can policymakers and regulators ensure tariffs remain affordable while still encouraging clean energy investments?
Ratul Puri, Chairman, Hindustan Power, said, “While renewable energy has brought down generation costs significantly, the focus is now shifting to the cost of integration, managing intermittency, strengthening the grid and ensuring reliability. Policy support must enable scale while keeping renewable power affordable. This requires a decisive shift to competitive bidding to capture falling technology costs and drive tariffs down, alongside long-term regulatory clarity that gives investors the confidence to commit capital. The energy ecosystem also needs stronger risk mitigation. Blended finance, payment security mechanisms and robust grid infrastructure are essential to lower the cost of capital and ensure reliable power evacuation. Targeted subsidies should focus on accelerating adoption where needed, without distorting price signals. This approach builds a stable, investment-ready framework that balances affordability, sustainability and sector-wide financial viability.”
Bindu Madhavi, Director – Policy & Regulatory, IESA, said, “Ensuring affordability in a renewable-rich power system requires moving beyond the narrow objective of achieving the lowest tariffs toward a more holistic focus on system efficiency, risk management, and long-term planning.
A key starting point is integrated resource planning, where the optimal mix of renewables, storage, transmission, and firm capacity is designed to minimise total system cost rather than just generation cost. This approach helps avoid expensive retrofits and ensures tariff stability over time. At the same time, stable policy and contracting frameworks, including long-term procurement models and targeted incentives for emerging technologies such as storage, play a critical role in reducing financing costs and attracting investment. Equally important is balanced risk allocation across stakeholders to address issues such as payment delays, curtailment, and regulatory uncertainty.
Affordability must also be protected through targeted mechanisms such as Direct Benefit Transfers (DBT), instead of cross-subsidies that distort price signals and impact sector sustainability. Strengthening DISCOM financial health through timely tariff revisions and loss reduction remains fundamental to this effort.
Importantly, an excessive focus on discovering the lowest tariff can be counterproductive, as it may lead to underinvestment in reliability and flexibility ultimately increasing system costs, particularly as demand from electric vehicles, green hydrogen, and digital infrastructure continues to grow. In parallel, reducing dependence on imported technologies and critical minerals through domestic manufacturing and supply chain diversification will be essential to manage future tariff volatility.
Finally, enhancing consumer awareness and participation, through measures such as time-of-day tariffs and smart metering, can help optimise demand patterns and reduce overall system costs.
In this context, affordability must be defined not just by price, but by predictability, reliability, and quality of supply, ensuring a balanced and sustainable energy transition.”
Samrath S Kochar, Founder and CEO at Trontek Electronics Ltd. said, “ As India rapidly expands renewable energy capacity, maintaining a balance between affordability and investment attractiveness will require a combination of cost-reflective tariff structures, market-based procurement, and targeted subsidies. Competitive bidding for renewable projects has already helped reduce solar and wind tariffs significantly, making clean energy increasingly cost-competitive with conventional power. At the same time, policymakers can improve affordability through direct subsidy transfers to vulnerable consumers, improved DISCOM efficiency, and reduced transmission and distribution losses. Strengthening long-term power markets, enabling energy storage, and expanding green energy corridors will also help integrate renewables more efficiently, thereby reducing overall system costs while ensuring continued investor confidence in India’s clean energy transition.”
What role do emerging technologies such as Battery Energy Storage Systems and smart grids play in shaping the future of electricity pricing?
Ratul Puri, Chairman, Hindustan Power, said, “Emerging technologies like Battery Energy Storage Systems and smart grids are making electricity pricing more dynamic and market aligned. BESS is introducing time-shifting into the system, storing low-cost renewable energy and dispatching it during peak demand. This reduces reliance on expensive peaking power, smoothens price volatility and begins to define a clearer price for firm and flexible power. Smart grids, on the other hand, enable real-time visibility and control. With granular data and digital infrastructure, tariffs can increasingly reflect actual demand conditions, moving toward truly dynamic and time of-use pricing. Together, these technologies are also improving renewable integration by managing intermittency, which stabilizes prices across the day. Over time, they will enable a more decentralised market where consumers can actively participate as both users and suppliers of power, making pricing more responsive, efficient and closely aligned to system realities.”
Bindu Madhavi, Director – Policy & Regulatory, IESA, said, “Emerging technologies such as BESS and smart grids are central to reshaping electricity pricing by enabling a transition from static, energy-based tariffs to dynamic, multi-dimensional pricing frameworks that reflect the true value of flexibility, reliability, and system support.
BESS plays a critical role in reducing the system’s dependence on traditional sources for reserves and balancing requirements, which are currently met largely through thermal generation. By providing fast-response services such as frequency regulation, ramping, and peak support, storage enables the development of ancillary service markets and more efficient pricing of flexibility. At the same time, storage will increasingly contribute to resource adequacy at the state level, supporting planning across long-term (capacity expansion), medium-term (seasonal balancing), and short-term (real-time system operations) horizons, thereby reducing reliance on conventional capacity for peak demand.
A key enabler for the economic viability of storage is revenue stacking, where a single asset can earn from multiple value streams including energy arbitrage, capacity support, and ancillary services. This will require tariff structures to evolve toward multi-part mechanisms incorporating energy, capacity, and flexibility components, moving beyond traditional fixed or cost-plus frameworks.
Beyond grid-scale applications, BESS is gaining traction in the commercial and industrial (C&I) segment, particularly for behind-the-meter and data-driven applications such as peak shaving, demand optimisation, and backup power. The emergence of Virtual Power Plants, which aggregate distributed energy resources like rooftop solar, storage, and flexible loads further enhances this by enabling decentralised assets to participate in markets and provide grid services.
Smart grids complement this transformation by enabling real-time data visibility, forecasting, and automated control, which are essential for implementing time-of-day and dynamic pricing. As pricing becomes increasingly data-driven, ensuring data reliability, interoperability, and cybersecurity will be critical. At the same time, clear regulatory frameworks around the classification and participation of storage assets will be necessary to unlock their full market potential.
Importantly, both storage and smart grid solutions can help defer or optimise transmission and distribution investments, reducing long-term infrastructure costs. While these technologies may involve higher upfront investments, coupling them with supportive government programs, financial mechanisms, and market-based instruments can unlock affordability by lowering total system costs over time.
In this context, storage and digitalisation are not just technology upgrade. They are fundamentally redefining electricity from a commodity to a multi-dimensional service, shaping tariff structures that are more dynamic, efficient, and aligned with the needs of a resilient and future-ready power system.”
Samrath S Kochar, Founder and CEO at Trontek Electronics Ltd. said, “Emerging technologies such as Battery Energy Storage Systems (BESS), smart grids, and advanced metering infrastructure will play a central role in enabling more dynamic and efficient electricity pricing models. Energy storage systems allow excess renewable generation to be stored and dispatched during peak demand periods, helping reduce price volatility and improving grid stability. Meanwhile, smart grids and smart meters enable real-time monitoring, demand response programs, and time-based tariffs, allowing utilities to better align electricity pricing with actual grid conditions. As these technologies scale, they will support the transition toward more flexible, data-driven tariff mechanisms that incentivize efficient energy consumption while facilitating higher penetration of renewable energy.”
How can the financial sustainability of DISCOMs be balanced with the need to maintain competitive and affordable electricity tariffs for industries and consumers?
Ratul Puri, Chairman, Hindustan Power, said, “Balancing DISCOM sustainability with affordable tariffs requires a structural reset in how the system is run and priced. The starting point is efficiency. Loss reduction, better billing and tighter operations can significantly improve cash flow without passing costs to consumers. Further, tariffs must progressively reflect the true cost of supply. This implies smarter design, reducing cross-subsidies and ensuring support to vulnerable segments is direct, transparent and timely. Equally important is how power is procured and consumed. More disciplined procurement, demand-side management and the integration of renewables with storage can lower the overall cost base. Ultimately, affordability and viability are not competing objectives. A more efficient, transparent and well-managed system is what enables both.”
Bindu Madhavi, Director – Policy & Regulatory, IESA, said, “Balancing DISCOM financial sustainability with affordable tariffs requires not only structural reforms within utilities, but also a broader shift toward consumer participation, technology adoption, and policy alignment. At the core, DISCOM viability depends on timely and cost-reflective tariff revisions, supported by reduction in AT&C losses through digitalisation, smart metering, and infrastructure upgrades. Improving operational efficiency directly lowers system costs, enabling more competitive tariffs without compromising financial health. At the same time, gradual rationalisation of cross-subsidies, combined with targeted mechanisms such as Direct Benefit Transfers (DBT), can ensure affordability while maintaining transparency and sector sustainability.
An equally important and often under-emphasised aspect is awareness and adoption of emerging technologies. Solutions such as energy storage, demand response, and smart energy management systems can significantly reduce peak demand and procurement costs. For industries and large consumers, behind-the-meter storage and data-driven energy optimisation can help manage load more efficiently, reducing dependence on high-cost peak power and easing the burden on DISCOMs. This requires enabling consumers to be more flexible and adaptive, supported by mechanisms such as time-of-day tariffs, open access, and green energy procurement options.
In parallel, policy and programmatic support at both central and state levels must evolve to integrate these emerging technologies. Government initiatives such as the PM Surya Ghar Yojana, RDSS, and capacity-building programs like Surya Mitra can be further strengthened to incorporate energy storage, hybrid systems, and distributed resources, ensuring wider adoption and system-level benefits.
At the same time, ensuring payment discipline and risk mitigation mechanisms across the value chain remains critical to improving DISCOM cash flows and reducing financing costs. Over time, DISCOMs must evolve from passive distributors to active system managers, leveraging technology, markets, and consumer participation to optimise procurement and system operations.
Ultimately, financial sustainability and affordability are not competing objectives. By combining efficient utility operations, informed consumer participation, and forward-looking policy frameworks, India can build a power sector that delivers reliable, high-quality, and competitively priced electricity while supporting long-term energy transition goals.”
Samrath S Kochar, Founder and CEO at Trontek Electronics Ltd. said, “Balancing the financial sustainability of DISCOMs with affordable tariffs requires a combination of operational reforms, improved cost recovery, and targeted policy interventions. Reducing aggregate technical and commercial (AT&C) losses, improving billing and collection efficiency, and modernizing distribution infrastructure can significantly strengthen DISCOM finances without increasing tariffs disproportionately . At the same time, tariff rationalization and gradual reduction of cross-subsidies can help create a more transparent and sustainable pricing framework. Governments can support this transition through direct benefit transfers for subsidies, ensuring vulnerable consumers remain protected while allowing tariffs to more accurately reflect the true cost of electricity supply.”
Looking ahead to 2030, how do you see electricity tariff structures evolving as India moves toward a cleaner and more flexible energy system?
Ratul Puri, Chairman, Hindustan Power, said, “By 2030, tariff structures in India will be far more dynamic and responsive. We will see greater adoption of time-of-day tariffs, more differentiated green pricing and increasing participation from consumers who both generate and consume power. As clean energy scales and system efficiencies improve, the power sector will also become more competitive, resilient and aligned with India’s long-term growth ambitions.”
Bindu Madhavi, Director – Policy & Regulatory, IESA, said, “By 2030, electricity tariff structures in India are expected to undergo a fundamental shift from static, average-cost pricing to dynamic, system-value-based frameworks that reflect the realities of a renewable-rich and increasingly decentralised power system.
As renewable penetration rises, tariffs will increasingly incorporate time-of-day and real-time pricing signals, encouraging consumption during periods of high renewable generation and reducing stress during peak demand. At the same time, tariff design will evolve toward multi-part structures, where energy, capacity, and flexibility are priced separately recognising the growing importance of storage, demand response, and ancillary services in maintaining grid stability.
The role of consumers will also change significantly. With the proliferation of rooftop solar, electric vehicles, and behind-the-meter storage, consumers will transition into prosumers, actively participating in energy markets. Mechanisms such as net billing, peer-to-peer trading, and virtual power plants are likely to become more prominent, enabling decentralised resources to contribute to system efficiency. In parallel, market-based mechanisms including ancillary service markets, capacity frameworks, and green energy markets will deepen, improving price discovery and enabling efficient allocation of resources across the system. The increasing digitalisation of the grid through smart meters and advanced analytics will further support granular, data-driven tariff design.
Recent global energy disruptions have also highlighted the importance of energy security, supply chain resilience, and price stability. Dependence on imported fuels, technologies, or critical minerals can expose tariffs to external volatility and sudden cost escalations. For India, this underscores the need to build a more self-reliant and diversified energy ecosystem, supported by domestic manufacturing, diversified sourcing, and greater reliance on indigenous resources. In this transition, the role of industry platforms such as the India Energy Storage Alliance (IESA) will be critical in bridging policy, industry, and innovation. By supporting market development, policy advocacy, knowledge dissemination, and stakeholder collaboration, IESA is well positioned to accelerate the adoption of energy storage, enable new market mechanisms, and contribute to the design of tariff frameworks that reflect the true value of flexibility and resilience.
Ultimately, by 2030, electricity tariffs in India will no longer be defined solely by the cost of supplying a unit of power, but by the value delivered to the system balancing affordability, reliability, flexibility, and long-term resilience.”
Samrath S Kochar, Founder and CEO at Trontek Electronics Ltd. said, “By 2030, electricity tariff structures in India are expected to become more dynamic, technology-driven, and aligned with grid conditions as the share of renewable energy continues to increase. Time-of-Day tariffs, real-time pricing, and demand-response mechanisms are likely to become more widely implemented, enabling consumers to adjust consumption patterns based on price signals. The growing deployment of energy storage, distributed energy resources, and electric vehicle charging infrastructure will also influence tariff frameworks by introducing greater flexibility in both supply and demand. Overall, tariff systems will increasingly focus on encouraging efficient energy use, supporting renewable integration, and ensuring grid reliability, while maintaining affordability for consumers.”
Electrify your feed! Click here to join our Whatsapp group and to get the latest updates, expert insights, and innovations driving India’s energy storage revolution.
