Rajasthan’s electricity regulator has notified new demand flexibility rules to help integrate growing solar capacity into the power grid.
The regulations require DISCOMs to actively manage when electricity is used, not just how much is generated.
By nudging consumption away from peak hours, the rules aim to cut coal dependence, reduce renewable curtailment and lower system costs.
India’s power grid is increasingly defined by a mismatch: solar energy floods the system during mid-day hours, while demand peaks in the morning and evening. Rajasthan’s new demand flexibility and demand side management regulations aim to bridge this gap by nudging consumers to shift when they use electricity, reducing reliance on coal-fired power during peak hours.
The Rajasthan Electricity Regulatory Commission (RERC) has notified the Demand Flexibility (DF) / Demand Side Management (DSM) Regulations, 2026, which are slated to come into effect from April 1, 2026. The regulations are currently open for public comments and inputs until February 17, 2025. They aim to integrate higher levels of renewable generation by activating demand-side mechanisms and reducing peak power infrastructure costs. The regulations obligate distribution companies (DISCOM) operating in the state to treat electricity demand as a dispatchable and monetisable grid resource.
The regulations follow the state’s Clean Energy Policy, 2024, which envisages demand-side management through various modes to integrate higher renewable energy into the power grid. The Central Electricity Regulatory Commission, through its 2023 regulations, had recommended that DISCOMs undertake Integrated Resource Planning with robust demand forecasting as a foundational prerequisite. Rajasthan’s notification follows similar regulations issued by Maharashtra’s electricity regulatory commission (ERC) in 2024 and Karnataka’s ERC in 2025.
Rajasthan plays a significant role in India’s clean energy transition, with 36.6 gigawatts (GW) of installed solar capacity — the largest among Indian states — contributing 26.9 per cent of India’s total solar capacity. With these notifications, DISCOMs encompassing 48 per cent of India’s installed solar capacity are now required to embed demand flexibility into their operational and planning frameworks, marking a structural shift in distribution system governance.
Unlike coal-based thermal power, which operates consistently throughout the day and provides continuous, dispatchable output, renewable energy, particularly solar, exhibits inherent intermittency and temporal variability.
This challenge is especially pronounced in the Indian context, where peak power demand arises in the early morning hours and peaks again in the evening around 6-7 pm. As solar generation is concentrated during mid-day hours, it is largely unavailable to meet these demand peaks.
The figure below illustrates this challenge using the winter demand profile (January 19-26 , 2026) of India’s northern power system. Even with lower overall winter demand, two distinct daily peaks are visible, both occurring outside peak solar generation hours, which are typically limited to the mid-day window between 11 am and 3 pm.
The current operational framework of DISCOMs lacks integrated mechanisms to actively nudge the demand profile. The prevailing long-term solution has been to increase battery storage and deploy stored energy during non-solar hours. However, this approach addresses only the supply-side challenge while leaving the demand profile unchanged.
The urgency of managing power demand is further underscored by renewable energy curtailment during daytime hours, as the grid’s current inflexibility limits the quantum of renewable energy absorption.
The mismatch between the behaviour of solar generation and the way India’s power system currently operates lies at the heart of why demand flexibility is becoming essential. This can be seen by comparing all-India electricity demand on November 13 and October 12, 2025 with solar generation on those days (Figures 2 and 3).
Peak demand occurs after solar generation exits the grid. Consequently, DISCOMs rely on coal-based thermal power to meet peak demand, locking in carbon emissions. Without the ability to nudge demand towards mid-day solar hours, grid inflexibility continues to limit the safe absorption of renewable energy.
The RERC regulations obligate DISCOMs in the state to establish a dedicated demand flexibility / demand side management (DF/DSM) cell, headed by a senior officer and responsible for load research, programme design, consumer outreach and outcome monitoring. The regulations mandate that DISCOMs meet defined Demand Flexibility Portfolio Obligations (DFPO), expressed as a percentage of the previous year’s peak demand, starting at 0.25 per cent in 2026-27 and rising to 2 per cent by 2029-30. These targets may be met through utility-led programmes or by procuring flexibility from registered aggregators.
DISCOMs must also identify network-constrained areas as DF/DSM Zones and prioritise them for interventions such as load shifting, demand response and energy efficiency measures. Crucially, all programmes must pass cost-effectiveness tests to ensure that consumer tariffs are protected, with independent verification of actual savings and load shifts. Together, these obligations push DISCOMs to treat demand flexibility as a core grid resource, on par with conventional generation.
Across the three ERCs, regulations converge around dedicated DSM cells within utilities, standardised measurement and verification protocols, cost-effectiveness testing, and sector-specific portfolios covering EV charging, agricultural pump scheduling and behavioural demand response. Rajasthan’s emphasis on PM-KUSUM solar pumps as flexibility assets and Maharashtra’s integration with capacity planning stand out as context-specific innovations.
Meanwhile, Karnataka ERC’s focus on a broad range of consumer segments — residential, commercial and agricultural — reflects India’s actual demand diversity rather than idealised grid models. Maharashtra ERC has also set aggressive targets, ramping up from 1.5 per cent to 3.5 per cent of peak demand reduction and backing them with enforceable financial incentives (Rs 0.20 crore per MW), signalling regulatory seriousness.
Historically, DISCOMs have played a passive role in the power system, operating as a bridge between demand creators — consumers — and power suppliers — generators. With increasing renewable energy penetration, supply has become variable. In addition, the advent of rooftop solar has transformed consumers into producers, necessitating a more active role for DISCOMs. The same shift is now expected of consumers, who ultimately control the demand side of the system.
Under these regulations, DISCOMs may offer consumers voluntary programmes that encourage shifting electricity use away from peak evening hours. These mechanisms rely on behavioural nudges supported by financial incentives. For instance, consumers may receive lower tariffs or incentives for operating water heaters, washing machines, air conditioners or industrial motors during mid-day hours when solar power is abundant, rather than during the evening peak.
In network-constrained areas, such programmes can also help avoid local outages or costly network upgrades. In practice, the regulations require DISCOMs to actively design, implement and fund such programmes, while ensuring participating consumers are not worse off and that overall system costs decline. This marks a shift in the consumer’s role — from passive bill-payer to active participant in balancing the power system.
India’s state electricity regulators are independently converging on the conclusion that peak demand, rather than total energy consumption, is the binding constraint. With institutional redesign, market signals and regulatory enforcement, existing consumer loads can be transformed into grid assets. The regulations favour a nudge-based approach, using financial incentives rather than coercive measures to align consumer behaviour with the needs of a renewable-dominated grid.
Implementation will require widespread deployment of Advanced Metering Infrastructure (AMI) under the Revamped Distribution Sector Scheme. Large-scale integration of agricultural consumers will depend on expanding smart metering alongside reliable grid supply to enable active demand shifting. State-owned DISCOMs, including those in Rajasthan, will require rapid capital investment in transmission and distribution infrastructure to realise the benefits of these regulations. DISCOM expenditure patterns will also need to move beyond power procurement alone.
Failure to implement demand flexibility will entrench existing inefficiencies, with continued renewable energy curtailment during mid-day hours even as DISCOMs pay for power that is never consumed. Meanwhile, evening peaks will remain dependent on coal-based thermal generation or costly peaking resources, driving up system costs and emissions.
From April to December 2025, Rajasthan supplied 35.8 per cent of India’s solar energy, and currently hosts 44 per cent of all under-construction solar power projects. Electricity regulators have recognised Rajasthan’s outsized role in renewable energy integration as critical to India’s energy transition. How effectively these regulations move from paper to practice will shape India’s ability to integrate renewables without locking in new fossil-based peak capacity.