India’s Power Distribution Sector Shows Strong Gains In Renewable Growth And Utility Performance

India’s power distribution sector is passing through an important phase as the country records strong growth in capacity addition along with visible improvements in financial and operational performance. By the end of 2025, India’s total installed electricity capacity crossed the landmark level of 500 GW. More importantly, non-fossil fuel sources now contribute over 51% of the overall energy mix. This change reflects the country’s steady move toward cleaner energy and long-term energy security.

The year also marked the highest ever annual renewable energy capacity addition, with more than 44.5 GW added in a single year. This is almost double the capacity added in the previous year. Solar power has played a major role in this expansion, with cumulative installed solar capacity crossing 100 GW. Wind energy has also gained momentum, with total capacity moving beyond 50 GW. These developments highlight India’s growing focus on climate action while meeting rising electricity demand.

At the distribution level, the 14th Annual Integrated Rating and Ranking of Power Distribution Utilities shows encouraging progress. A total of 65 utilities were assessed for the financial year 2024–25. Out of these, 41 utilities secured higher grades of A+, A, or B. Around 22 utilities improved their ratings compared to the previous year, while 30 maintained their existing performance levels. This suggests a phase of stabilization after years of financial stress in the sector.

One of the key indicators of improvement is the reduction in the gap between the average cost of supply and average revenue realization. At the national level, this gap has come down to nearly INR 0.6 per unit. Efficiency has also improved, as Aggregate Technical and Commercial losses declined from 21.91% in FY 2021 to 15.04% in FY 2025. Notably, 38 utilities have now brought their losses below the 15% level, which is considered a healthy benchmark.

Much of this progress is linked to the Revamped Distribution Sector Scheme, which focuses on technology upgrades and financial discipline. Smart metering has emerged as a key reform area. Over 20.33 crore smart meters have been approved across the country, and more than 5.28 crore have already been installed. These meters help utilities track consumption accurately, reduce billing errors, and improve revenue collection. Utilities are also using tools such as AI-based data analysis, SCADA systems, and GIS mapping to improve network reliability and reduce power theft. Digital platforms like the V-Mitra app allow consumers to report issues, helping improve transparency and accountability.

In the latest rankings, Gujarat’s state-owned utilities continued to lead, with UGVCL, MGVCL, DGVCL, and PGVCL securing the top four positions with A+ grades. Among power departments, Kerala Power Department and Maharashtra’s BEST also delivered strong performances and received A+ ratings. To encourage further improvements, the Ministry of Power has introduced interest rate rebates through PFC and REC for distribution companies that show consistent progress in their annual ratings.

The report also highlights growing attention to sustainability and consumer services. Utilities are simplifying net-metering procedures and promoting rooftop solar under schemes such as PM Suryaghar. At the operational level, safety training is being modernized using virtual reality tools, while mobile applications are being used for real-time safety monitoring. While the progress is notable, the report stresses that continued efforts in tariff reform, loss reduction, and infrastructure investment will be critical to building a financially strong and future-ready power distribution sector.