AI windfall in energy

The future of electricity lies in smart use of data and storage, turning complexity into opportunity. AI can drive efficiency, integrate renewables, and reshape energy systems, delivering major economic and climate gains if its own energy use is managed wisely.

The recent announcement of GST rate cuts has come as a significant relief for the power sector, particularly benefiting renewable energy players. Lower taxes have built investor confidence and accelerated project deployment, marking a crucial step toward the government’s vision of ‘Viksit Bharat’. While policy support is essential, another transformative force is quietly reshaping the sector: Artificial Intelligence. AI is emerging as a silent enabler, bringing drastic change in the power domain, leading the country towards achieving its 2070 goals along with uninterrupted power availability.

The impact of such interventions is best measured through successful pilots. A pilot succeeds when it generates tangible returns on investment and advances core utility objectives, such as power reliability and quality of service. In practice, pilots often achieve far more than their initial mandate. The real measure of a utility’s effectiveness is whether a solution enhances its ability to deliver uninterrupted, high-quality electricity. This includes reducing losses, managing critical assets, and expanding connections while maintaining efficiency. A compelling example comes from Jaipur, where a utility leveraged AI-driven drones for inspections. Beyond uncovering electricity theft, the exercise revealed overloaded transformers and encouraged communities to shift toward formal electricity connections. This approach not only increased revenue but also improved service quality, demonstrating how AI can deliver multidimensional benefits beyond its immediate application.

The most effective pilots take it a step further in strengthening the grid, enhancing customer service, and demonstrating that technological innovation pays off. By focusing on measurable outcomes aligned with key performance indicators, utilities can harness AI and other emerging technologies to transform operations, optimising resources and building a more resilient power system. In the backdrop, the power sector is witnessing a quiet revolution. AI acts as a force multiplier for the energy sector, facilitating smarter operations, higher efficiency, and improved service delivery. The result is a win-win for both utilities and consumers, which is leading India closer to its ambitious energy and sustainability targets.

AI adoption challenges

Utilities across the globe are increasingly embracing technologies with artificial intelligence promising improved efficiency, reliability and decision-making. However, integrating these innovations comes with certain challenges that utilities must navigate to realise their full potential. Workforce readiness remains a key hurdle in the sector, as many utilities lack personnel skilled in AI and its practical applications. Identifying high-impact pilots, ensuring strong governance, fostering trusted partnerships, and integrating legacy systems with new technologies are equally critical. Additionally, data quality and availability pose serious constraints, as inaccurate or incomplete records can undermine AI deployment and decision-making. The hurdles must be addressed for pilots to scale and deliver real impact.

Sumedh Agarwal from AEEE points out that utilities face multiple barriers when adopting AI. “One of the biggest hurdles is workforce readiness,” he says. “At utilities, we generally do not have a cadre of people who understand these technologies really well. AI needs to be mapped to human understanding and real-world use cases, and a corresponding cadre must be created. Right now, that’s missing.”

Another challenge, according to Agarwal, is identifying pilots with high impact. “Multiple pilots are going on, but knowing which one will provide significant ROI is crucial. Utilities should take those forward and provide an ecosystem that supports technology providers.”

If we take note of governance and partnerships, it is worth mentioning that without strong governance and partnerships, utilities cannot make progress. Agarwal emphasises that if one finds a good partner, it is essential to ensure they remain in the ecosystem with sufficient trust and time. That allows scaling beyond pilot projects. Legacy systems, such as SCADA, also need to communicate with new technologies, and the right patches and integrations are crucial.

Echoing these challenges, Aarkesh Venkataramanan from Kimbal, points to data issues. “Data availability and documentation are major problems in utilities. For example, transformers should ideally be mapped to feeders, and feeders should be mapped to customers. But operators often change these mappings, and there is no reliable record of the load profile a transformer has experienced. Without this, it is almost impossible to train AI models effectively.”

Harnessing smart data and batteries

Data from smart meters and the strategic deployment of batteries across the grid are changing the power landscape. The future of the electricity system lies in harnessing data and storage intelligently, thereby turning complexity into opportunity.

According to Sumedh Agarwal, “The huge amounts of terabytes of data coming from smart meters will give a big leap. How we analyse it, the insights we generate, and the new programs we design based on that data, that is where the fortune lies.” Smart meter data is not just about monitoring consumption. It enables accurate forecasting, reducing deviation settlements and enhancing grid reliability. It also supports customer disaggregation, helping utilities understand which appliances drive peak consumption and even guide customers toward energy-efficient choices. Agarwal emphasises the behavioural aspect, noting, “Peak is becoming peakier day by day. If you can shift that peak to solar hours or reduce it, you decarbonise the grid. That is the final aim: we ensure sustainability and a more stable load curve.”

Complementing this data-driven approach is the integration of batteries at multiple points in the grid. Aarkesh Venkataramanan explains, “Batteries can be placed at six locations: generation sites, transmission, distribution, individual industries, auxiliary service providers, and for peak management. Strong, capable BESS systems with proper energy management are critical to managing the grid.”

These systems are only as effective as the intelligence layered on top. “AI will play a vital role in making the grid resilient to fluctuations,” Venkataramanan adds. By combining predictive insights from smart meters with battery storage and AI-driven energy management, utilities can stabilise demand, shift peaks to renewable hours, and move decisively toward a decarbonised, sustainable grid.

Emerging green hydrogen industry

When we discuss decarbonisation in the power sector, a crucial emerging segment is green hydrogen. The green hydrogen industry is emerging as a cornerstone of the global clean energy transition. Produced using renewable energy sources, green hydrogen provides a carbon-free alternative to traditional fossil fuels, powering sectors that are challenging to electrify, such as heavy industry, shipping, and long-haul transportation. India, with abundant solar and wind resources, is rapidly scaling green hydrogen projects, supported by policy incentives and international collaborations. The government has also launched the ‘Green Hydrogen Mission’ to accelerate the adoption of green hydrogen and encourage investors. While costs remain higher than conventional hydrogen, technological innovations and economies of scale are gradually narrowing the gap.

Sanjeev Sharma from GH2Solar says, “The world is shifting gears, and the hydrogen economy is accelerating rapidly in India,”. Partnerships are driving this momentum on two fronts. First, global technology players are collaborating with Indian manufacturers to build domestic production capacities. For example, a South Korean company, AHES, is transferring electrolyser technology for a new unit in Madhya Pradesh. Similarly, L&T has partnered with Switzerland’s McPhy to leverage its expertise in electrolyser manufacturing, a field with a century-long history.

The second type of partnership focuses on end-users and exports. Indian manufacturers are partnering with domestic and international buyers to ensure that the green hydrogen and ammonia they produce reach markets efficiently. ACME recently signed an agreement with Japan’s IHI to export 1 million metric tons of green ammonia. Europe and South Korea are emerging as key markets, driven by climate-conscious consumers willing to pay a premium for sustainable fuels.

“These collaborations are not just about production, they are about building a carbon-free future,” Sanjeev adds.

From a price perspective, gray hydrogen, produced from fossil fuels, is currently significantly cheaper, priced around ₹150–160 per kilogram. In contrast, green hydrogen, generated via renewable energy, costs nearly double at ₹330–350 per kilogram.

“This difference may seem huge when you look at immediate numbers or product profitability,” explains Sanjeev Sharma, “but the short-term saving of ₹150–180 by using gray hydrogen could ultimately cost us five times more in mitigating carbon impacts on the planet.”

To bridge this gap, the Indian government launched the National Green Hydrogen Mission, allocating ₹19,000 crore to incentivise electrolyser manufacturing and reduce end-user costs. GH2Solar, for example, has been awarded a 105 MW electrolyser capacity, along with incentives of ₹157 crore, to encourage production and achieve affordable pricing. Additionally, green hydrogen benefits from production-linked incentives of ₹50 per kg in the first year, gradually reducing to ₹30 per kg by the third year.

“The trajectory we anticipate for green hydrogen mirrors India’s solar journey,” he adds. “From ₹15–17 per unit in 2010, solar prices fell to ₹3–4 today. Similarly, we aim for green hydrogen to reach ₹280 per kg by 2030, making it competitive with gray hydrogen.”

Overall, the energy landscape in India is witnessing the convergence of digital innovation, decarbonisation technologies, and emerging markets, such as green hydrogen. While utilities face challenges from workforce readiness, legacy systems, and data reliability, smart meters, AI, and strategically deployed batteries offer pathways to a more resilient, decarbonised grid. Simultaneously, the green hydrogen sector is evolving through technology partnerships, export-oriented collaborations, and government incentives that aim to bridge the cost gap with gray hydrogen. This, in fact, is the good news for the industry and India as a whole, which has set a decarbonisation target and is advancing in technologies that leverage AI.

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Quotes:

Aarkesh Venkataramanan, Deputy Director of New Product Strategy – Kimbal

“By combining predictive insights from smart meters with battery storage and AI-driven energy management, utilities can stabilise demand, shift peaks to renewable hours and move decisively toward a decarbonised, sustainable grid.”

Sumedh Agarwal, Director – Smart & Resilient Power and Mobility- Alliance for an Energy Efficient Economy (AEEE)

“We generally do not have a cadre of people who understand these technologies really well. AI has to be mapped to human understanding and real-world use cases, and that kind of cadre has to be created.”

Sanjeev Sharma, VP, Business Development & Corporate Strategy- GH2Solar

“The trajectory we anticipate for green hydrogen mirrors India’s solar journey. From ₹15–17 per unit in 2010, solar prices have fallen to ₹3–4 today. Similarly, we aim for green hydrogen to reach ₹280 per kg by 2030, making it competitive with gray hydrogen.”