Quick Facts
What DRE is
DRE (Distributed Renewable Energy) refers to renewable energy generation that occurs close to the point of consumption, typically at small to medium scale. The term encompasses:
Residential rooftop solar.
Commercial and institutional rooftop solar.
Solar pumps for agriculture.
Off-grid solar home systems.
Microgrids in remote villages.
Biomass plants at industrial sites.
Small hydro plants.
Community solar installations.
DRE is contrasted with utility-scale renewable energy, where large central plants supply many consumers through grid networks. The two categories complement each other in India’s renewable energy strategy.
For solar in particular, DRE includes:
Rooftop solar (residential, commercial, institutional).
Solar pumps under PM KUSUM Component B.
Off-grid solar lighting and home systems.
Community-scale solar in microgrids.
India’s solar deployment combines large utility-scale (about 80% of installed solar capacity) and growing DRE (about 20%). The trajectory is for DRE share to grow, particularly through PM Surya Ghar’s residential rooftop expansion.
Why DRE matters
For India’s energy transition, DRE offers several strategic advantages:
Reduced transmission losses: Generation near consumption minimises losses through transmission lines.
Reduced infrastructure burden: Avoids need for major grid expansion to connect new utility-scale generation to consumption areas.
Consumer empowerment: Consumers become prosumers (producers + consumers), participating actively in energy supply.
Rural electrification: DRE through microgrids can serve remote villages without expensive grid extensions.
Grid resilience: Distributed generation improves grid stability and reduces single-point-of-failure risks.
Energy democracy: Multiple small actors instead of few large players.
Climate alignment: DRE aligns with global decentralisation trends in clean energy.
For Indian policy, DRE supports multiple objectives simultaneously: energy access, climate goals, rural development, and reduced grid investment needs.
DRE programmes in India
Major Indian DRE programmes:
PM Surya Ghar Muft Bijli Yojana (2024-present): Residential rooftop solar with up to Rs 78,000 CFA. Targets 1 crore installations.
PM KUSUM (2019-present): Agricultural solar with three components. Component A: Decentralised solar plants on farmland. Component B: Standalone solar pumps replacing diesel. Component C: Solarisation of grid-connected agricultural pumps.
Phase-II Grid-Connected Rooftop Programme: Commercial and institutional rooftop solar.
DDUGJY (Deen Dayal Upadhyaya Gram Jyoti Yojana): Rural electrification including off-grid solutions.
State-specific microgrid initiatives in various states.
Biomass programmes through MNRE.
Small hydro programmes for hilly states.
Together, these programmes cover the spectrum of DRE applications from residential to agricultural to community-scale.
DRE installations in India (2026)
Approximate DRE deployment scale:
Residential rooftop solar: 8 to 15 GW (varies by source and counting method).
Commercial/institutional rooftop: 5 to 10 GW.
Solar pumps (PM KUSUM Component B): 3 lakh+ pumps.
Component A decentralised plants: 1 to 3 GW.
Microgrids: thousands of installations, mostly small.
Off-grid solar home systems: tens of lakhs (legacy installations).
Biomass and small hydro: 5 to 10 GW.
Combined: 25 to 50 GW of DRE capacity, representing about 20% to 30% of India’s total renewable capacity. The growth trajectory is steeper than utility-scale, with DRE expected to gain share.
DRE versus utility-scale
| Aspect | DRE | Utility-Scale |
|---|---|---|
| Typical scale | kW to MW | MW to GW |
| Location | Near consumption | Often distant from consumption |
| Grid connection | LT or HT | HT or EHT |
| Investor | Consumer or small developer | Large IPP, utility |
| Per-installation cost | Higher per kW | Lower per kW |
| Total capacity (India 2026) | 25 to 50 GW | 100+ GW solar |
| Growth rate | Accelerating | Steady |
| Regulation | State + central | Mostly central (CERC) |
| Procurement | Various schemes | SECI auctions, DISCOM tenders |
The two categories complement each other in India’s renewable mix.
DRE economic considerations
Per-kW costs are higher for DRE than utility-scale:
Utility-scale solar CAPEX: about Rs 30,000 to Rs 40,000 per kWp.
Commercial rooftop CAPEX: about Rs 40,000 to Rs 50,000 per kWp.
Residential rooftop CAPEX: about Rs 50,000 to Rs 60,000 per kWp.
Solar pump system CAPEX: about Rs 60,000 to Rs 80,000 per kWp.
The smaller scale reduces economies of scale. Higher per-kW cost is offset by:
Lower transmission requirements.
Higher per-kWh value (offsetting retail tariff vs wholesale tariff).
Avoided grid extension costs.
Subsidy support that reduces effective cost.
For consumers and farmers, DRE economics often work despite higher per-kW cost.
DRE policy direction
Government policy supports DRE expansion:
PM Surya Ghar’s 1 crore residential target by FY 2027.
PM KUSUM expansion to additional rural areas.
DRE support in National Solar Mission revised targets.
Smart cities initiatives include DRE components.
Net metering and gross metering reforms support DRE.
DISCOM modernisation includes DRE accommodation.
For Indian policy:
Continued subsidy support through PM Surya Ghar.
Streamlining DRE application and approval processes.
Improving DISCOM capability for distributed integration.
Supporting Indian manufacturing capacity for DRE-suitable products.
The trajectory is for DRE to grow significantly through the 2020s.
DRE and battery storage
The combination of DRE and battery storage creates new opportunities:
Solar plus battery for residential reliability.
Microgrids with solar plus battery for remote communities.
Commercial DRE with battery for peak demand management.
EV charging combined with solar and battery at residential and commercial sites.
For Indian DRE, battery storage is becoming more attractive as battery costs decline. The combination supports the energy transition more comprehensively than DRE alone.
Common DRE mistakes
Treating DRE as a fixed concept. The category is dynamic; new technologies (perovskite cells, sodium-ion batteries) expand DRE possibilities.
Underestimating DRE’s role in India’s renewable strategy. Some focus on utility-scale obscures the growing DRE contribution.
Missing scheme opportunities. PM Surya Ghar, PM KUSUM, and other schemes have specific timelines and provisions.
Not coordinating with DISCOMs. DRE installations require DISCOM net metering and inspection.
Ignoring quality. With many DRE installations, vendor selection and quality vary significantly.
Best practices
For DRE customers, use the relevant scheme (PM Surya Ghar for residential, PM KUSUM for farmers, etc.).
Choose MNRE-empanelled vendors and ALMM-listed modules.
Coordinate with the local DISCOM for net-metering feasibility.
Consider battery storage for enhanced value.
For commercial DRE, evaluate CAPEX, OPEX, and group captive options.
For long-term operations, maintain proper documentation and warranty records.
Standards and references
DRE installations follow MNRE technical standards (ALMM, MNRE empanelment). State SERC regulations cover net metering and DISCOM coordination. CEA Connectivity Regulations 2019 cover grid interconnection. Specific scheme guidelines apply for each programme.
Related glossary terms
- PM Surya Ghar Yojana
- PM KUSUM
- DREBP
- MNRE
- National Solar Mission
- DISCOM
- Net Metering
- Balance of System
Key takeaways
DRE (Distributed Renewable Energy) refers to renewable energy generation close to consumption, typically at kW to MW scale. Examples include residential rooftop solar, agricultural solar pumps, commercial rooftop, microgrids, and biomass plants. India’s DRE deployment supports energy access, climate goals, rural development, and reduced grid investment needs. Major programmes include PM Surya Ghar (1 crore residential rooftop target), PM KUSUM (agricultural), and DDUGJY (rural electrification). DRE share of Indian renewable capacity is 20% to 30% and growing. The combination of DRE with battery storage creates new opportunities for the energy transition.