Algorithms will increasingly define India’s energy future; but the real test is how they will run

There is a big change happening in India’s power sector; lines of code are now making decisions that engineers and bureaucrats used to make. The country’s electricity grid, which has long been associated with outages, inefficiency, and high losses, is evolving into a digitally empowered network in which real-time data, sensors, and automation drive supply, demand, and distribution.

However, as this change accelerates, the essential question is no longer whether India can develop a smart grid, but how and who controls it, particularly as technology replaces current institutional structures. The National Smart Grid Mission (NSGM) and the Ministry of Power intend to transform India’s electrical system into a “secure, adaptive, sustainable, and digitally enabled ecosystem” via stakeholder perception.

India has deployed over 40 million smart meters by mid-2025, indicating progress in the development of Advanced Metering Infrastructure (AMI). However, despite lofty goals and hardware deployment, obstacles remain. FSR Global’s March 2025 research identified a fundamental problem in developing an interoperable smart grid ecosystem, including limitations in standards, insufficient data governance, vendor fragmentation, and cyber-security concerns.

Smart grids usher in a fundamentally new form of “governance”—one mediated by algorithms. AI-powered systems predict loads, reroute supply, detect defects, and (in some situations) determine dynamic tariffs. Cities like Delhi are the first to use these kinds of technologies, and state utilities are working with companies from around the world to use advanced analytics. For example, the Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) made a deal with the Global Energy Alliance for People and Planet (GEAPP) to improve its system with AI, machine learning, and battery energy storage devices.

But this choice makes it hard to tell who is at fault. If an algorithm sends out goods incorrectly, places businesses ahead of families, or charges a peak surcharge, who is to blame? The rules and laws haven’t been updated to align with how technology operates in the real world. If algorithmic decisions aren’t clear, operations might not be clear either. In the smart grid, data is as important as copper lines. Smart meters collect specific consumption patterns down to the appliance level; an analytics tool interprets the data and utilises it to improve network performance.

But this makes people worry about privacy, security, and fairness. A recent poll by the Confederation of Indian Industry (CII) found that consumers are worried about billing accuracy, connectivity issues, and data privacy, which are all making it harder to roll out smart meters.

Regulatory frameworks also fall behind. While the Electricity (Amendment) Bill, 2022, includes significant structural reforms, it does not address data ownership rights, algorithmic transparency, or consumer redress. Unless these loopholes are bridged, smart grids may recreate existing hierarchies in a new digital format. India is switching to smart grids for a number of reasons, but one of the most important is to deal with the growing amount of renewable energy, largely solar and wind, that is being used more and more at the distribution level. Smart systems help balance energy generation that happens at different times, control battery storage, and make prosumer (consumer-plus-producer) possible.

The government also recently extended the interstate transmission system (ISTS) charge waiver for battery energy storage projects until June 2028. This is a big incentive for stabilising grids with a lot of renewable energy. However, as one FT analysis on the “solar village” project in Gujarat highlighted, storage capacity remains a bottleneck: India needs 336 GWh by 2030, but predictions for 2026-27 are just 82 GWh. Not every state is moving at the same rate. In Karnataka, the implementation of smart meters under the Revamped Distribution Sector Scheme (RDSS) has suffered delays. A state official recently stated that even with subsidies, costs will not drop below Rs 1,000 per meter in Bengaluru. The state is still reviewing whether to opt in.

In another example, India’s transmission authority recently withdrew grid access for approximately 17 GW of delayed clean-energy projects in states such as Rajasthan, Gujarat, and Madhya Pradesh in order to prioritise projects that are ready for implementation. For areas experiencing energy poverty, the transition to smart grids is about more than just efficiency; it’s about justice. The promise of increased reliability, lower losses, and lower tariffs exists, but only if the transformation is equitable. The key dimensions of justice include distributive, procedural, and recognitional. These measures demonstrate that, even as smart grid technology advances, execution limits.

If smart grid governance remains opaque, the risk is a two-tier energy system: a “well-connected algorithmic” grid for some and a weak heritage grid for others. To make smart grids work for India, not just utilities, policy must keep up with technology. Algorithmic accountability frameworks require openness, auditability, and human monitoring in grid-decision systems. Data governance regime aims to figure out who owns data about how consumers use electricity, how it can be used and shared, and how to get consent.

In systemic cyber resilience, it is needed to ensure that even smaller DISCOMs establish Cyber Security Operations Centers (CSOCs) and undertake regular audits. Equitable rollout options include prioritising states with high energy poverty for meter improvements, analytics tools, and demand-response programs. Secondly, interoperability standards accelerate the integration of grid protocols, vendor systems, and communication networks to prevent smart systems from becoming proprietary silos.

Power plants and transmission lines will no longer define India’s energy future; instead, algorithms will play an increasingly important role. But the real test is how those algorithms are run: do they help people or systems? Do they help make things fairer or make things worse? Smart grids provide the basis for the transformation that India needs to make in order to reach its goal of 500 GW of non-fossil capacity by 2030. The grid might be getting smarter, but the people in charge need to be too.

India’s move to smart grids is more than just a technological leap; it also means a change in how the energy business is run, how people are held accountable, and how justice is served. As computers take over more and more of the control of electricity flows, the decision of who gets energy, when, and for how much money moves from people to machines. This move, although promising to make things more efficient and reliable, also shows some big hazards, such as breaches of data privacy, unequal access, and slow government action. As India moves from physical to digital infrastructure, it needs to make sure that the intelligence that runs its grids is fair, accessible, and overseen by the people.

Anusreeta Dutta is a columnist and climate researcher with prior experience as a political researcher and ESG analyst.

Aakash Bajpai is Student, Indian Institute of Forest Management.

Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth