Further, by May 2023, crude oil imports from Russia had surged to a record high of US$ 4.5 billion and commands a 21 per cent share of India’s oil imports. Distributed renewable energy (DRE) can mitigate this dependence by tapping into locally available renewable resources.

According to the Asia Pacific Climate Report 2024 by the Asian Development Bank (ADB), India slashed its oil and gas sector subsidies by 85 per cent, dropping from US$ 25 billion in 2013 to US$ 3.5 billion in 2023 (Jain 2018; PPAC 2024; Raizada et al. 2024).

By phasing out petrol and diesel subsidies (2010-2014) and gradually raising taxes (2010-2017), India freed up fiscal space to boost support for renewable energy, electric vehicles and power infrastructure.

For instance, solar panels can be installed on rooftops in cities, towns, and villages, drastically reducing the need for centralised fossil-fuel-based power generation and transmission. At the national level, Transmission and Distribution (T&D) losses are approximately 20.66 per cent, with distribution losses totaling Rs 31,672 crore (or US$ 4.17 billion). Figure 3 below sheds some light on how India is performing relative to other countries.

The Global Energy Alliance for People and Planet (GEAPP) found that a standalone rooftop solar system cut energy costs for micro, small, and medium businesses in Uttar Pradesh by 426 per cent, dropping from Rs 14.68 per kWh with diesel to just Rs 3.45 per kWh — enabling a local grain mill to double its wheat output. Low- and middle- income countries can now bypass traditional grids and embrace more efficient, distributed electrification, particularly in off-grid regions like remote islands.

Job Creation And Economic Growth In The Green Economy

The transition to DRE is not just an environmental win — it’s also an economic opportunity. The renewable energy sector in India already employs over 1.02 million people, according to the International Renewable Energy Agency (IRENA), and the growing demand for DRE solutions promises to create even more jobs.

In terms of solar panel installation capacities, India ranks 4th in 2023, with 2.8 per cent of the cumulative capacity addition. Figure 4 below provides further insight into the job distribution within the solar sector.

With only 25 per cent of the jobs created in the off-grid solar sector, the job creation potential is immense. Moreover, DRE can spur economic growth in rural areas by enabling small businesses to thrive. Solar-powered enterprises, like refrigerated storage for perishable goods, offer farmers in rural India an opportunity to increase their incomes.

According to NITI Aayog, rural areas with access to reliable power have seen significant improvements in productivity, literacy and overall economic development.

Disaster Resilience: Ensuring Power During Emergencies

In a country prone to floods, cyclones, and other natural disasters, the resilience of India’s power grid has come into question. The vulnerability of centralised grids to natural calamities can result in extended power outages, leaving millions without electricity.

However, decentralised renewable systems such as solar microgrids and off-grid systems can operate independently, ensuring that essential services like hospitals, schools, and water pumps continue to function during emergencies.

For instance, in cyclone-prone regions of Odisha, solar-powered microgrids have provided continuous energy supply in the aftermath of disasters, proving the resilience of decentralised energy systems.

The National Institute of Disaster Management (NIDM) highlights that DRE can be a key component in ensuring energy access during crisis situations, thereby improving the safety and recovery of affected communities. Power grids with built-in redundancy and distributed generation can help maintain energy supply during disasters. Smart grids enable adaptive and efficient energy distribution.

Policy And Investment: Creating An Enabling Ecosystem For DRE

To accelerate the deployment of Distributed Renewable Energy (DRE) in India, creating a robust policy and investment ecosystem is essential. India’s government has already taken significant steps by introducing policy frameworks such as the National Action Plan on Climate Change (NAPCC) and the Jawaharlal Nehru National Solar Mission, which focus on scaling up renewable energy sources, including DRE systems.

However, further progress depends on enhancing these policies to include targeted incentives, subsidies, and streamlined regulations to make DRE technologies more accessible, especially for rural and underserved areas.

The government can also support DRE through financial instruments like green bonds, subsidies for decentralised solar installations, and tax breaks for businesses adopting renewable technologies. Additionally, fostering public-private partnerships will drive innovation and investment, particularly in off-grid and microgrid solutions.

These initiatives should be complemented by long-term financing mechanisms from banks, multilateral agencies, and impact investors to create a sustainable market for DRE solutions. The following good practices can be implemented by India to further grow the DRE ecosystem

Government Land Assurance: Offer firm commitments for land provision, similar to Saudi Arabia’s model, where the government leases land for renewable energy projects. This reduces land acquisition risks and ensures timely project execution.

Grid Access and Infrastructure: Ensure guaranteed grid connection for renewable energy projects. Drawing from Portugal’s successful approach, the government can auction land with assured grid access, helping developers lower project costs and mitigate risks.

Offshore Wind Support: Proactively develop offshore power grids and conduct detailed environmental and resource studies before tendering, as seen in the Netherlands. This provides developers with critical data to reduce uncertainty and lower project costs.

Innovative Financing Models: Implement mezzanine financing, as used in Africa, to bridge gaps in project financing, and encourage the use of mixed loan structures, like in Australia, to provide flexible funding options.

Green Bank Development: Establish a government-backed green bank to facilitate large-scale investments in renewable infrastructure. This model, seen in Australia, can mobilise private capital for high-capex projects and ensure financial sustainability.

Inflation-Indexed Tariffs: Adopt inflation-indexed Power Purchase Agreements (PPAs) as practiced in Brazil, Peru, and the United Kingdom (UK) to ensure long-term revenue stability for IPPs and reduce investment risks.

Investments in grid infrastructure, energy storage solutions, and localized distribution systems will help integrate DRE sources with the national grid, ensuring reliability and efficiency. Given India’s energy access challenges, DRE holds immense potential to transform the energy landscape, reduce dependence on fossil fuels, and contribute to the country's climate goals.

A Future Powered By DRE

India’s energy needs are immense, but so are the opportunities provided by DRE. The government, businesses and citizens all have a role to play in scaling up DRE solutions. With the right policies, investments, and technology, India can lead the world in building a decentralised, sustainable and resilient energy future.

As IRENA predicts, a global energy transition driven by decentralised, renewable power sources is not just a possibility — it’s the future. And India, with its abundant renewable resources, is uniquely positioned to seize this opportunity. Let’s unlock the potential of DRE, and light the way to a cleaner, brighter and more equitable future for all.

This is Part 2 of a series. You can read Part 1 here.

(The writer is a public policy and urban transportation enthusiast and specialist. Views are personal)