March 29th, 2022 - India is currently the third-largest energy consumer in the world.  Over the next 20 years, India will require the addition of a power system the size of the EU’s current power system. While energy use has doubled over the last two decades, India’s per capita energy use is still lower than half the world average, implying that the latent energy demand is high and transmission to electricity to end-consumers is inefficient. Further, over 270 million people are set to join India’s urban population over the next two decades - requiring significant improvements across electricity generation to distribution.

Grid Landscape in India: The Need for Reform

The power sector value chain in India is primarily divided into three segments:  

1. Power Generating Companies, such as Adani Power, Tata Power, Reliance Power

2. Transmission Companies who operate the transmission lines such as PGCIL (Power Grid Corporation of India)

3. Distribution Companies (Discoms) who distribute power to end-consumers such as BSES, TPDDL

Discoms are power utilities which handle multiple functions as power transmission operators, such as establishment of capex infrastructure, metering, demand management, purchase of electricity and billing to customers.  Many of these discoms are publicly owned by individual state governments.  Poor infrastructure along with inadequate asset utilization (consumer appliances), results in downstream last-mile consumers not receiving full supply of energy while the cost of supply is increasing. This is also taking place in tandem with the prices on a tariff basis for end-consumers are also increasing. 

In the last few years, private players have also emerged to provide technology efficiency to discoms. These players have mainly operated in the i) capex infrastructure and ii) smart metering areas (such as our portfolio company, Probus Smart Things); as well as in the form of iv) renewable integration into the grid. The opportunity to create a platform to address iii) demand response management to provide overall grid stability while also facilitating i), ii) and iv) areas, is untested in India but very active in international markets. This concept needs to be initiated through a systematic partnership with discoms, state by state, while clearly demonstrating lower transmission losses, lower cost of power supply, and improved load management.

The Rise of the Decentralized Power Grid

There are changing dynamics in India’s power sector, primarily driven by more renewable capacity being added; the introduction of EVs, and policies such as delicensing of power distribution (Budget FY21-22) which disbands the discom monopoly in their state, and introduces competition and retail choice for customers.

Distributed Energy Resources (DERs), such as onsite solar, wind and battery storage, as well as EV chargers, and microgrids are increasingly prevalent for industrial businesses to achieve their energy management goals.  The costs of DER have fallen sharply in recent years, so that these resources outcompete conventional energy sources, even without policy incentives.  For discoms, as more industrial customers link their energy usage to increasingly sophisticated energy management systems, discoms can tap into these resources to meet peak demand or unusual spikes in electricity usage, and use this new flexibility to help balance electricity supply and demand as the share of large scale solar and wind power (which can be intermittent) grows.

The Concept of a Virtual Power Plant

A Virtual Power Plant (VPP) is an aggregated system of energy assets remotely and automatically optimized by a software-based platform.  A VPP brings together heterogeneous DERs in order to enhance electrical power generation, as well as trade it in the electricity market. To make the system more efficient or reliable for both distribution facilities and users, energy storage systems are employed in conjunction with traditional solar panels, wind turbines and other power plants. These units are interconnected and their produced power is dispatched smartly through a central control room (VPP cloud) with the aim of balancing load between power generation and power consumption of the networked systems traded on the energy exchange market. 

The rise of VPPs in India will depend on vast consumer adoption of DER assets in residential, commercial and industrial locations, as well as a ready wholesale market for consumers to transact in energy usage, the latter of which is already in motion since 2020 with the launch of RTM, RECs and GTAM by the Indian Energy Exchange.  Moreover, discoms in India need to display willingness to partner with DER aggregation software platform which prove that collating hundreds of aggregated commercial-industrial customers' behind-the-meter storage systems (including solar, EV chargers, batteries etc), can lead to improved reliability and performance of power distribution.

Edgegrid’s multi-stack, DER software platform

Edgegrid’s platform addresses the problems:

• Energy wastage in commercial and industrial buildings;

• Reliance on a centralized, non-digitized coal-fired grid; and

• Financial losses to discoms as a result of poor demand-supply optimization and ineffective asset utilization.

This value proposition allows C&I buildings to optimize energy usage through ‘behind-the-meter’ aggregation of power supply lines, demand response management, solar asset usage, and EV integration, through partnership with the Andhra Pradesh discom and various other stakeholders. The SaaS-based dashboard and analytics will digitize various decentralized assets in the form of a VPP, and build subsidized electricity revenue streams in a data-driven marketplace model.

Edgegrid is a first mover in India, as one of the first DER software platforms which already has locked in a partnership with a discom.  With the advent of new regulation in 2021 in India, pushing for the delicensing of power distribution, the gradual movement away from the discom monopoly and the strong drive towards renewable integration (power generation, power purchase and electric vehicles), Edgegrid is uniquely positioned to harness its technology expertise to create a robust offering for utilities.  It aims to minimize energy wastage and ineffective asset utilization, as well as promote integration of solar rooftop assets and encouraging a decentralized energy consumption model, and also move towards a more dynamic, climate-friendly transactional market for energy trading.