India’s Power Grid Is Due for a Redesign — Not Just an Upgrade

Why the next phase of power-sector reform will look less like steel-and-wires and more like pharma’s supply-chain transformation

As the Centre prepares for another round of engagement with state DISCOMs, India’s power debate risks circling familiar ground: capacity additions, financial packages, and incremental efficiency measures. These matter, but they no longer address the core problem.

India’s power challenge today is not a shortage of generation. It is a system struggling

to manage volatility.And that requires a redesign of the grid’s operating model — much like the pharmaceutical industry had to redesign its supply chain two decades ago.

The Old Grid Model Is Reaching Its Limits

India built its grid for a simpler world: predictable demand growth, centralised generation, one-way power flows, and limited real-time variability. That architecture worked when coal plants dominated and renewables were marginal.

That world has changed.

India now has over 180 GW of renewable capacity, with solar and wind accounting for a rapidly rising share of incremental generation. Rooftop solar, open access renewables, electric vehicles, and flexible industrial loads are adding complexity at the edges of the grid. Weather — not fuel availability — increasingly determines supply at critical hours.

The stress shows up not as headline shortages, but as operational fragility:

• Frequent congestion and curtailment in renewable-rich states

• Rising costs of balancing and ancillary services

• Frequency deviations during peak transitions

• Increasing dependence on ad-hoc interventions

DISCOMs feel this stress most acutely. Despite multiple reform rounds, aggregate technical and commercial (AT&C) losses still hover near 15–16% nationally, with several states far worse. Payment delays to generators, dependence on short-term power purchases, and financial exposure to price volatility persist.

This is not because DISCOMs lack assets. It is because they are absorbing system-level volatility that the grid was never designed to pool or manage.

Why More Assets Alone Won’t Fix the Problem

The instinctive response is to add more: more transmission lines, more substations, more capacity. These help — but only up to a point.

Beyond that point, hardware without better control increases complexity faster than it increases resilience.

Consider recent grid stress events during heatwaves, when solar generation falls sharply in the evening just as demand peaks. Even with sufficient installed capacity, the system scrambles to balance supply, driving up costs and exposing weak links. These are not failures of planning; they are failures of real-time coordination.

The problem is structural: volatility is being handled locally and reactively, by individual DISCOMs, substations, or generators, instead of being absorbed at the system level.

Why This Moment Mirrors Pharma’s Turning Point

The pharmaceutical industry faced a similar crisis in the 1990s.

Large pharma companies once tried to do everything themselves — discover drugs, run trials, manufacture, and market. As science grew more complex, costs exploded and failure rates rose. A single failed drug could wipe out years of investment.

Pharma’s solution was not to “do R&D better,” but to redesign the value chain:

• Innovation moved to biotech firms and universities

• Risk was staged through clinical phases

• Portfolios replaced blockbuster bets

• Big pharma became orchestrators of a distributed ecosystem

Crucially, risk moved from individual firms to the system.

India’s power grid is approaching a comparable inflection point.

How the Grid Will Be Redesigned — Pharma-Style

From Central Assets to Distributed Portfolios

Just as pharma moved from a few blockbuster drugs to portfolios of smaller bets, the grid is moving from dependence on large central plants to portfolios of distributed resources — renewables, storage, flexible loads, and demand response.

No single asset should be existential. Variability must be diversified.

From Static Planning to Continuous Control

Old grid planning relied on long-term forecasts. The new grid requires continuous balancing, using real-time data, forecasting, and automated control. Software becomes the nervous system of the grid, not an add-on.

This is the equivalent of pharma shifting from one-time R&D bets to staged trials with constant feedback.

From DISCOMs as Buyers to DISCOMs as Orchestrators

DISCOMs cannot remain passive buyers of power. Their future role is to orchestrate supply, demand, and risk — coordinating markets, contracts, storage, and flexibility.

This mirrors big pharma’s evolution from inventor to coordinator.

The Tailwinds Are Already in Place

Three forces make this redesign inevitable.

First, technology.Advanced forecasting, grid-scale analytics, and control systems are now capable of managing variability that would have been impossible a decade ago.

Second, regulation.Policy is quietly shifting from asset approval to system performance — reliability, quality of supply, and financial sustainability. This opens the door to modular solutions rather than monolithic upgrades.

Third, capital markets.Investors care less about megawatts installed and more about cash-flow predictability. That pressure mirrors what once forced pharma to abandon vertically integrated R&D models.

India’s Power Grid Redesign — What This Means for DISCOM Reform?

The next phase of reform should focus less on repeated financial rescues and more on structural change:

• Pooling variability across regions and time

• Investing in control and coordination infrastructure

• Allowing controlled experimentation through pilots and micro-grids

• Redesigning incentives so volatility is absorbed by the system, not by the weakest players

This is not about privatisation versus public ownership. It is about operating architecture.

The Bottom Line

India’s power sector is entering its pharma moment.

Just as the pharmaceutical industry learned that innovation risk could not sit on one balance sheet, the power system is learning that volatility cannot sit with individual DISCOMs or assets.

The future grid will not be defined by how much power it produces, but by how intelligently it manages uncertainty.

The redesign has begun.The choice before policymakers is whether to accelerate it — or keep financing yesterday’s architecture.

Disclaimer: In the article "India’s Power Grid Is Due for a Redesign — Not Just an Upgrade" above - Any views, comments or communication (above or in the past) should not be construed to be investment advice by Alternative Growth (hereafter referred to as “AltG”) in any form whatsoever. AltG does not make an offer to sell or solicit to buy any securities.