The Telangana State Electricity Regulatory Commission (TSERC) has issued a notification for implementing the TSERC (Smart Grid) Regulation, 2021.

The regulation would be enforced from the date of its publication in the Telangana Gazette.

Last year, TSERC had drafted smart grid regulations to enhance the efficiency of its power generation, transmission, and distribution networks.

The Commission has identified several key priorities to address existing and emerging challenges in the operation of the transmission and distribution systems to promote smart grid development in the state. These challenges include cybersecurity issues, large-scale changes in generation mix and capabilities, and the large potential of new load from electric vehicles.


The Commission believes that smart grid technologies have considerable potential to promote demand response, reducing wholesale prices and price volatility.

The objectives of the regulation are to enable integration of various smart grid technologies and measures to bring about economy, improve efficiency in generation, transmission, and distribution licensee (DISCOM) operations, manage the transmission and distribution networks effectively, enhance network security, integrate renewable and clean energy into the grid and microgrids.

According to the Commission, the smart grid process would constitute activities such as formulation and implementation of smart grid programs, monitoring, reporting, and cost-effective assessment of these programs, training and capacity building, and methodology for setting smart grid plans and funding levels.

 Constitution of a smart grid cell

The TSERC said all transmission licensee and DISCOMs must constitute a smart grid cell within three months of the regulation being notified. The smart grid cell would be responsible for formulating and implementing smart grid programs and baseline study and development of data. The cell would also be responsible for developing smart grid projects, including plans for implementation, monitoring and reporting, and cost-benefit analysis.

Baseline study and development of data

To identify the targets and outcomes for smart grid programs, the transmission licensee and DISCOMs must undertake a baseline study with the necessary database.

The transmission licensee and DISCOMs must also undertake studies to estimate the potential for employment of specific efficiency technologies and applications, determine existing baseline technical conditions, and establish key performance indicators. According to the baseline study’s result, both would develop a smart grid program for their supply area.

Formulation of a smart grid plan

For the Commission’s approval, the transmission licensee and DISCOMs must submit an integrated ‘multi-year smart grid plan’ for their respective license areas along with a multi-year tariff petition or aggregate revenue requirement (ARR) petition.

All smart grid projects requiring investments of over ₹200 million (~$2.68 million) must be submitted to the Commission for prior approval of investments. Investments less than ₹200 million (~$2.68 million) do not require prior approval of the Commission if it is part of the multi-year smart grid plan of the utility approved by the Commission.

The Commission would allow provision for research and development (R&D) activities in the smart grid projects in the ARR plan of the DISCOMs up to a limit equivalent to ₹0.01 (~$0.00013)/kWh of sales of the DISCOM. The distribution licensee is required to maintain a separate account for this fund. Utilizing this fund would require prior approval of the Commission.

The Commission would also allow the creation of provision for R&D activities in the smart grid projects in the ARR of the transmission licensee and State Load Despatch Center (SLDC), up to a limit equivalent to 0.50% of the ARR of the respective year of transmission licensee and SLDC.

The transmission licensee and the SLDC are required to maintain a separate account for this fund. Using this fund would require prior approval of the Commission.

 Execution of smart grid programs, projects

 The transmission licensee and DISCOM must execute smart grid projects or programs in line with the Commission’s approval. Both must follow system standards as per Central Electricity Authority’s (CEA) regulation. In case of no standards or regulations notified by the CEA, both should adopt regulations and standards notified by the Commission.

The transmission licensee and DISCOM should identify the net incremental costs linked with the program’s design, planning, and implementation. Both can recover the incremental cost through tariffs or any other mechanism. To qualify for cost recovery, the program or project must be approved before implementation and executed in line with the approved program plans.

 The transmission licensee and DISCOM have to reserve 1% of the project cost for capacity building and consumer awareness as it would require consumer education and outreach in smart grid programs’ initial phases.

Telangana government has been taking various measures to increase the efficiency of the grid. Last year, TSERC released the final regulations for the demand-side management initiatives of DISCOMS to encourage consumers to change their electricity consumption patterns with respect to the timing and level of electricity demand to help consumers use electricity more efficiently.

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