A SIP of energy: For people, power, and planet

This article is authored by Vaibhav Chowdhary and Gaurav Bhatiani.

India’s power requirement, particularly peak demand, is growing rapidly, driven by urbanisation, digitalisation, net zero-led electrification, and climatic factors such as heat waves. These demands cause a disproportionate increase in the cost of power procurement for distribution companies (discoms).

Green Earth(Pixabay)

To illustrate, Indian Energy Exchange (IEX) spot prices are about 20% higher during peak hours compared to the daily average and 50% higher relative to the off-peak hours. This translates into an additional ₹1.0- ₹2.0 per kWh for peak hour procurement. Further, meeting peak demand entails higher losses and additional investment in distribution networks.

To mitigate these challenges, we propose a simple, government-enabled scheme that converts avoided peak consumption into real money for households. Enter the Energy Systemic Investment Plan (E-SIP): Not a mutual fund, but an energy-saving program to enable households to earn money by committing and delivering measurable reductions in peak demand. These avoided peaks, in turn, save enough in procurement and infrastructure costs to fund the programme.

E-SIP is a savings plan with a “deposit” of kilowatts not used (negawatts) during peak hours. Those negawatts are worth the most when the grid is strained. If measured and rewarded transparently, it is a win-win for all stakeholders. A well-designed E-SIP scheme can deliver outsized value.

First, the economics: the marginal cost of peak electricity is steep and rising, as power procured from the spot market, battery storage, or natural gas is more expensive. Second, the enabling technology: smart meters, prepaid wallets, and appliance automation are becoming widespread to enable measurement and value reductions fairly. Last, but not least, is the tremendous popularity and trust associated with SIPs as a savings instrument.

International experience shows it works at scale. The UK’s Demand Flexibility Service paid about 1.6 million customers for over 3.3 GWh of verified peak reduction in 2022-23, demonstrating that households respond when the offer is simple and credible. Japan has formally recognised “negawatt” trading to create an aggregated demand response market. In California, a multi-year Demand Response Auction Mechanism created a competitive route for aggregators to deliver peak reductions.

Energy SIP can be implemented through the state nodal agency (SNA), with support from discoms. E-SIP will enable households to “invest” in behavioral and technology shifts such as automated appliance scheduling, thermostat nudges, battery/EV charge shifting, and monetise avoided peaks as an annual bill credit. The system gains by deferred capacity addition, reduced peak power purchases, avoided network upgrades, and greater resilience. Consumers gain through lower bills and the satisfaction of being paid for flexibility.

The programme would enable voluntary enrollment with a default opt-in. Residential consumers enroll via the SNA app or portal; consumers can also join through accredited aggregators. A default opt-in (with easy opt-out) dramatically boosts participation, while preserving choice. Consumers opt into a Peak Plan and select a target tier (e.g., 0.25 kW, 0.5 kW, 1 kW reduction) during notified Peak Hour (say 6–10 pm). The tier becomes the customer’s committed peak reduction.

The plan would be technology-enabled but tech-neutral. Participants can shift usage manually or use automation such as smart plugs, timers, inverter AC eco-modes, EV/ battery scheduling. Discoms may co-fund low-cost retrofits on priority feeders. Open APIs will enable device makers and aggregators to integrate, and community groups such as housing societies to join as E-SIP communities. This approach is particularly useful in small towns and peri-urban areas where peak demand at the individual level may be low but is collectively rising rapidly.

Each participant will receive a personalized peak baseline, adjusted for weather and occupancy. Verified reductions below the baseline earn “E-SIP credits”. A transparent baseline (for example, 10 of 14 similar days with the same weather/weekday filters) will establish consumption without E-SIP to avoid gaming and ensure genuine savings.

The rules will be kept simple and consumer friendly. For example, there will be no penalties for not achieving selected targets in the first year. Further, an opt-out window will be offered so consumers do not feel trapped. A transparent floor price ₹/kW for capacity and seasonal bonus multipliers for the critical months or times will be published in advance. Performance bands can be established. For example, Gold (over 90% of commitment), Silver (75–90%), Bronze (50–75%), with proportional payout and re-tiering in the next year.

Credits would accrue in a transparent wallet and be visible on the billing app. The state can commit to an annual settlement—a lump-sum reduction in bills at year-end—plus a small reward during special “peak-down events” (such as heat waves and outage risks). The first few units of peak reduction earn the highest rate (to reward participation by low-use households); larger shifts receive a lower but still attractive rate. Independent verification will be required for a sample to avoid malpractice. Persistent gaming (such as inflating load before events) will trigger a claw-back and temporary suspension.

The programme pays for itself through avoided peak power purchases, reduced balancing costs, and deferred network upgrades. A modest fund from the state budget may need to be established to ensure smooth cash flow and ensure customers receive timely benefits.

Energy SIP is more than a billing tweak. It is a social contract for flexibility that engages people and power systems to work for the planet. It aligns with the Prime Minister’s Mission LiFE by promoting responsible consumption and systemic efficiency.

The government promises transparency and timely payouts; citizens promise small, predictable shifts in electricity use that collectively avoid building peaking plants or buying expensive power. It channels household and community ingenuity—timers, routines, common-area scheduling—into systemic reliability.

The most resilient grid of the future will not just build more; it will use what is already available smartly. An energy SIP turns that principle into everyday practice and annual savings that people can see, trust, and bank.

This article is authored by Vaibhav Chowdhary, director, and Gaurav Bhatiani, senior fellow, Ashoka Centre for a People-centric Energy Transition, Ashoka University and visiting professor, ISB.