GreenLetter

Rethinking Electricity Demand: The Role of DSM in India’s Power Distribution Sector

India’s electricity demand is growing rapidly, driven by urbanisation, rising household incomes, expanding commercial activity and increasing adoption of electrical appliances. National electricity consumption nearly doubled from 874 TWh in FY2013–14 to 1,623 TWh in FY2023–24, a compound annual growth rate of 5.8%; over the same period, peak electricity demand rose 79%, from 136 GW to 243 GW. India’s peak load increased 54% between 2017 and 2024, from 162 GW to 250 GW, with summer heatwaves and cooling demand major contributors.[1] [2]

In FY2025–26, India’s electricity requirement was about 1,709 BU, while peak demand reached about 245 GW.[3] For Distribution Companies (DISCOMs), this means not only supplying more electricity but also managing when and how it is consumed. Rising evening peaks, seasonal cooling loads and increasing pressure on distribution infrastructure make demand management an important part of reliable and cost-effective power distribution.

Why DSM matters?

Demand Side Management (DSM) provides a structured approach to addressing the challenge of meeting rising, increasingly peak-intensive electricity demand without relying solely on additional generation and network capacity. It encompasses interventions that influence electricity consumption through improved efficiency, changes in consumption patterns and technologies that enable more flexible demand.

Unlike conventional supply-side interventions, which focus on adding generation or network capacity to meet demand, GreenTree Global helped DISCOMs to make better use of the electricity system they already have by the implementation of the identified DSM measures. This is particularly important because peak demand is growing faster than average demand in many periods, increasing the cost and complexity of maintaining reliable supply.

How can DSM help DISCOMs?

Reduce electricity consumption: Promote energy-efficient appliances and equipment to lower overall demand without compromising consumer comfort or service quality. Residential electricity consumption alone rose from 256 TWh to 409 TWh over the last decade and accounts for about 25% of India’s electricity use in FY2024–25.[4]
Manage peak demand: Encourage consumers to shift or reduce consumption during high-load periods. Space cooling contributed about 15% of India’s total electricity-demand growth between 2021 and 2025.[5]
Improve distribution planning: Use consumer load profiles and demand assessments to identify priority interventions and target high-impact consumer segments. Fans, air conditioners and coolers together account for about 40% of household electricity consumption in surveyed Indian homes.[6]
Defer infrastructure investments: Where technically and economically feasible, reducing peak loads can help defer investment in transformers, feeders and other network assets. Large-scale LED deployment under UJALA alone is estimated to have avoided 9,586 MW of peak demand.[7]
Strengthen consumer participation: Engage households, commercial establishments and industries as active participants in electricity demand management. More than 75% of AC users in a CEEW study used star-labelled ACs, showing that labelling can influence consumer choices.[8]

From strategy to implementation

Effective DSM requires more than identifying energy-saving opportunities. DISCOMs need a clear understanding of their consumer mix, consumption patterns, peak-demand drivers and implementation constraints. This must be translated into targeted interventions, supported by suitable financing mechanisms, consumer outreach, technology partners and robust monitoring and verification.

Through its engagement with DISCOMs, GreenTree Global works across DSM implementation—from assessing opportunities and developing programmes to facilitating implementation and identifying pathways for scale-up. The objective is to move from isolated energy-saving initiatives to a structured DSM portfolio that addresses both electricity consumption and system-level demand challenges.

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Two sides of demand management
Energy efficiency reduces the amount of electricity required to deliver a service—for example, using a five-star air conditioner instead of a less efficient model.
Demand flexibility changes when electricity is consumed—for example, shifting water heating or other flexible loads away from peak-demand periods.

Together, these approaches can help DISCOMs manage electricity consumption more efficiently while improving the flexibility of demand.

Energy-Efficient Appliances: Bringing DSM into Indian Households

Households are an important focus for DSM because everyday appliances collectively account for a substantial share of residential electricity consumption. Residential electricity use is growing at about 6% annually and is projected to at least double over the next decade.^[^[9]^][^[10]^]

The opportunity lies in improving the efficiency of appliances already in use and ensuring that new purchases deliver better energy performance. An efficient appliance can provide the same service while consuming less electricity, generating savings over its operating life.

Why the BEE star label matters

The Bureau of Energy Efficiency (BEE) operates India’s Standards and Labelling programme, which helps consumers identify appliances based on energy performance. For appliances covered under the programme, the star label provides a convenient basis for comparing relative efficiency across models.

More stars generally indicate higher efficiency within the applicable product category and labelling scheme.
Lower electricity consumption can reduce household bills, particularly for appliances used frequently or for long operating hours.
Efficiency gains accumulate over time: modest per-appliance savings become significant across millions of households.
Informed purchasing decisions matter: consumers should compare star rating, annual energy consumption, capacity and purchase price—not price alone.
Rating criteria and mandatory or voluntary labelling status vary by appliance and can change as BEE updates its programmes.

Where households can make the biggest difference

1. Air conditioners: Addressing cooling demand

Air conditioning is an increasingly important driver of electricity demand, particularly during hot weather and evening peak periods. In BEE/CLASP’s 2024 household survey, air conditioners accounted for 11% of household electricity consumption, while fans accounted for 24% and air coolers 2%.[11]

AC ownership remains relatively low but is expanding: about 8% of households had room ACs according to the India Cooling Action Plan, with ownership projected to rise to 21% by 2027–28 and 40% by 2037–38. National cooling demand is expected to grow eightfold by 2037–38 compared with 2017–18 levels, making efficient cooling a priority DSM lever.^[^[12]^][^[13]^]

2. BLDC fans: Efficient cooling at accessible cost

Brushless DC (BLDC) fans generally consume less electricity than conventional induction-motor fans providing comparable airflow. A conventional ceiling fan typically uses 70–80 W at full speed, while BLDC models commonly use 25–35 W—saving roughly 50–65%.[14] [15]

Because fans are the single largest household end use in the BEE/CLASP survey—24% of residential electricity consumption—widespread BLDC adoption can deliver material cumulative savings. At 10 hours of daily use and a tariff of ₹9/kWh, replacing a 75 W conventional fan with a 28 W BLDC fan can save roughly ₹1,543 per fan annually; at 16 hours daily use, savings can rise to about ₹2,200.[16]

3. Refrigerators: Continuous consumption, year-round savings

Refrigerators operate throughout the day, making efficiency especially important. They alone accounted for 18% of household electricity consumption in the BEE/CLASP survey, while kitchen appliances overall accounted for 28%.

An efficient model can reduce recurring electricity consumption over its lifetime. Consumers should compare the energy label alongside storage capacity and suitability for household needs.

4. Water heaters and geysers: Managing high-power appliances

Electric water heaters can contribute significantly to household consumption, especially where usage is frequent. Efficient models, appropriate sizing, insulation and sensible operating practices can reduce electricity use.

Water heating also offers demand-flexibility potential: where storage-type geysers are used, heating can be scheduled outside local peak periods, subject to consumer convenience and safety.

5. Washing machines: Efficiency beyond purchase price

Energy-efficient washing machines can reduce electricity consumption per wash. Consumers should compare the applicable energy label, capacity and programme settings, while using appropriate load sizes and efficient wash cycles.

Washing machines are among the appliances where efficiency adoption remains mixed; CEEW notes that fan, geyser and washing-machine efficiency uptake has been less consistent than for ACs and refrigerators.[17]

6. LED lighting: A simple, scalable efficiency measure

Replacing conventional incandescent bulbs with LED lamps can substantially reduce lighting-related electricity consumption. A 7 W LED bulb provides light comparable to a 60 W incandescent lamp, saving nearly 90% of the electricity used by an incandescent bulb and about 50% compared with a CFL.[18]

India’s UJALA programme demonstrates the scale of this opportunity: 36.87 crore LED bulbs distributed have delivered estimated annual savings of 47,883 million kWh, ₹19,153 crore in consumer electricity bills, 9,586 MW of avoided peak demand and 3.88 million tonnes of CO₂ emissions avoided annually.[19]

Do You Know?

Small Appliance Choices, Cumulative Savings

A single fan upgrade can make a difference

Replacing a conventional 75 W ceiling fan with a 30 W BLDC fan can save around 246 units of electricity and approximately ₹1,478 every year, at a tariff of ₹6 per unit. The higher upfront cost can be recovered in less than two years.

246

Units saved annually

₹1,478

Annual bill savings

<2 years< div>

Payback period

Across three fans, the savings can exceed ₹4,400 annually. At scale, such everyday appliance choices can also help reduce peak demand and ease pressure on the electricity network. [20]

The opportunity for DISCOMs

For DISCOMs, appliance efficiency is not simply a consumer-awareness issue. Targeted programmes can accelerate replacement of inefficient equipment, promote higher-efficiency purchases and prioritise appliance categories that contribute most to local demand.

The most effective interventions combine consumer awareness with practical implementation models, suitable financing and access to efficient products. By identifying the appliances and consumer segments with the greatest savings potential, DISCOMs can design programmes that deliver measurable benefits for households while contributing to more efficient electricity distribution.

Energy efficiency begins at the consumer end—but its cumulative impact can extend across the entire power system.

Demand Response: Unlocking Flexibility in Electricity Consumption

While energy efficiency reduces how much electricity is consumed, demand response focuses on when it is consumed. By enabling consumers and connected devices to adjust consumption in response to grid conditions, demand response helps DISCOMs manage evening and seasonal peaks, improve network utilisation and access flexible load resources that would otherwise remain untapped.

This shift is becoming increasingly relevant as India’s power system balances rising demand with a growing share of variable renewable energy. Regulatory momentum is also building: Maharashtra’s 2024 Demand Flexibility and Demand Side Management regulations, for example, require DISCOMs to meet demand-flexibility portfolio obligations rising from 1.5% of peak demand in FY2025–26 to 3.5% by FY2029–30.

Four case studies: From pilots to scale-up

The following interventions illustrate how DSM can move from concept to implementation across different consumer segments—telecom infrastructure, households, commercial buildings and residential solar prosumers.

Automated Demand Response (ADR) — Telecom Towers, BRPL

Demand Response in Action

Turning Distributed Loads into Grid Flexibility

Explore how demand response initiatives are unlocking flexibility across different consumer segments.

CASE STUDY 01 Telecom Towers · Automated Demand Response

Can small reductions across distributed loads add up to meaningful grid flexibility?

Telecom towers operate continuously and are geographically dispersed, making them a promising source of aggregated flexibility. In a pilot across four telecom tower sites, automated demand response delivered an average demand reduction of 5.61 kW per site. Scaled across 500 towers, this could unlock approximately 2.8 MW of flexible capacity—without requiring new generation or network augmentation.

5.61 kW

Average demand reduction per site

2.8 MW

Potential flexible capacity across 500 towers

The pilot demonstrates that many small, distributed loads can become a material grid resource when coordinated through automation, clear signals and reliable measurement.

Home Energy Management Systems (HEMS) — BYPL

CASE STUDY 02 Residential Loads · Home Energy Management Systems

Can connected homes become active participants in demand management?

Home Energy Management Systems give consumers greater visibility and control over household loads while creating opportunities for utilities to manage demand during critical periods. In this intervention, 51 consumers were engaged and 153 devices were connected, with an expected saving of 0.3 kW per air conditioner.

Consumers engaged

153

Devices connected

0.3 kW

Expected saving per AC

Beyond immediate energy savings, HEMS can help households shift flexible consumption—such as air-conditioning, water heating and charging—away from peak hours. The initiative highlights the importance of consumer trust, simple interfaces and demonstrable bill savings in making residential demand flexibility viable.

Building Demand Response — UHBVN & JVVNL

CASE STUDY 03 Residential ACs · Dynamic Power Display

Can real-time feedback nudge AC users towards more efficient behaviour?

Room air conditioners contribute to peak demand, while low temperature settings and the belief that “quick cooling” requires lower setpoints can drive inefficient use. A randomized controlled trial used the Urja Sanchay App and smart plugs to provide consumers with a dynamic display of AC power consumption, alongside behavioural nudges on cost, environmental and health benefits.

3.4%

Monthly savings in October

50%

Drop post-nudge

30–50%

Ambient temperature rise

1,100

5-star AC ownership

BEHAVIOURAL INSIGHT

While average AC setpoints of 22.5°C indicate room for efficiency, one-off alerts may only deliver temporary changes. Sustained visibility through real-time feedback and consistent nudges is key to driving monthly savings.

Solar Scale-Up — Flock Energy and JVVNL, Rajasthan

CASE STUDY 04 JVVNL · AI-Driven Rooftop Solar Demand Aggregation

Can AI make rooftop solar adoption simpler and more scalable?

Traditional door-to-door outreach can be slow and costly, particularly in Tier-2 and Tier-3 cities. In a JVVNL initiative, an AI-powered platform combined utility meter data with automated, personalized solar-savings reports to identify high-potential households and qualify leads based on rooftop rights and financing needs.

73%

Positive consumer response

50%

Reduction in acquisition cost

30–50%

Conversion to installation

1,100

Pilot households

A KEY INSIGHT

The analysis found that 25% of customers regularly exceeded their sanctioned load—a stronger indicator of rooftop solar potential than general consumption. This enabled more targeted consumer outreach.

With endorsements from MNRE and RTI, the initiative points to a scalable, utility-led approach to residential solar adoption, including potential expansion through RESCO models in Rajasthan.

Looking ahead

Together, these interventions demonstrate the breadth of DSM opportunities available to DISCOMs—from reducing electricity consumption through efficient appliances, to unlocking demand flexibility through connected devices and buildings, to expanding consumer-facing energy solutions such as rooftop solar.

The next step is to strengthen implementation models, address financing and adoption barriers, and replicate successful approaches across utilities. The focus must shift from isolated pilots to scalable, measurable and sustainable DSM programmes—supported by clear metrics, consumer incentives, interoperable technologies and robust monitoring, reporting and verification.

Demand response is not merely a technical intervention; it is a way of making consumers, buildings and distributed assets active partners in building a more reliable, affordable and flexible power system.

Greenletter is GreenTree's periodic newsletter on energy efficiency, sustainability, and market transformation across India's buildings and industry sectors.

Authored by: Shivani Rani, Harsh Srivastava, Dhruv Jain, Dr. C.S. Azad