RERC notifies demand flexibility regulations for Rajasthan DISCOMs

The Rajasthan Electricity Regulatory Commission (RERC) has notified the Rajasthan Electricity Regulatory Commission (Demand Flexibility/Demand Side Management) Regulations, 2026, introducing a framework that requires distribution licensees in the state to implement demand flexibility and demand side management (DF/DSM) programmes. 

The regulations prescribe Demand Flexibility Portfolio Obligations (DFPOs), programme evaluation criteria, cost recovery provisions, and an incentive-disincentive mechanism for distribution licensees.

DFPO targets

The regulations require distribution licensees to achieve annual DFPO targets based on the previous year’s peak demand. The target has been set at 0.25% for 2026-27, 1.0% for 2027-28, 1.5% for 2028-29 and 2.0% for 2029-30.

The financial year 2026-27 has been designated as a preparatory year for load research and capacity building, and no disincentive will apply for non-achievement during this period. Distribution licensees may meet the obligations through their own programmes or by procuring demand flexibility capacity from registered Aggregators.

Implementation requirements

The regulations require every distribution licensee to establish a DF/DSM Cell headed by an officer not below the rank of Chief Engineer. The cell will be responsible for load research, programme design, implementation, consumer outreach, monitoring and evaluation.

The objective is to influence electricity demand, encourage consumers to modify consumption patterns, complement supply-side investments, reduce greenhouse gas emissions, protect consumer interests and lower overall electricity tariffs.

Incentives and penalties

Distribution licensees achieving DFPO targets beyond the prescribed level will be eligible for an incentive of Rs 0.20 crore per MW of additional demand flexibility achieved.

A disincentive of Rs 0.20 crore per MW will apply for any shortfall against the prescribed target.

Eligible programmes

The regulations recognise a wide range of demand flexibility measures, including time-based pumping for irrigation and drinking water schemes, smart electric vehicle charging, grid-to-vehicle (G2V) and vehicle-to-grid (V2G) services, behind-the-meter battery energy storage systems, heat pumps, thermal energy storage, efficient refrigeration and cold storage, replacement of inefficient appliances, consumer awareness programmes, agricultural load shifting to renewable energy hours, Cooling-as-a-Service, Building Management Systems, and procurement of flexibility through Aggregators.

Diesel generator-based resources are explicitly excluded from participation under DF/DSM programmes.

Role of Aggregators

The regulations introduce a framework for registration of Aggregators to provide demand response, distributed generation and energy storage services.

Distribution licensees are required to ensure that Aggregators possess the necessary technical and financial capability. Independent Verification Agencies (IVAs) must remain separate from Aggregators.

Consumers must be allowed to switch between Aggregators without any cost, and participation in demand response programmes will remain voluntary unless otherwise directed by the Commission.

Cost recovery and evaluation

Distribution licensees are required to include all DF/DSM programmes in their Multi Year Tariff (MYT) and Annual Revenue Requirement (ARR) filings. Programme costs will be recoverable subject to prudence checks by the Commission.

Before implementation, programmes must satisfy the Total Resource Cost (TRC) test by demonstrating a positive Net Present Value. They must also undergo the Ratepayer Impact Measure (RIM) test. Programmes that pass the TRC test but fail the RIM test may still be approved if the tariff impact remains below Rs 0.005 per kWh or 0.05% of the existing tariff, whichever is higher.

Monitoring and disclosure

The regulations require independent evaluation of DF/DSM programmes by empanelled IVAs using the International Performance Measurement & Verification Protocol (IPMVP).

Distribution licensees must annually publish load research reports, appliance use and saturation reports, DF/DSM programme portfolios, implementation action plans, status reports and evaluation reports on their websites.

The regulations also require consumer load data to be protected in accordance with the Digital Personal Data Protection Act, 2023. Consumer data cannot be shared with third parties without explicit and revocable consent, except for settlement and verification by an IVA.

Applicability

The regulations apply to all distribution licensees, including deemed distribution licensees and their successor entities, in Rajasthan. While the regulations came into force on June 15, 2026, the DFPO obligations under Regulation 3.4.1(c) are effective from April 1, 2026.

The featured photograph is for representation only.