Role of distributed resources in energy transition: A multi-country perspective
This report evaluates distributed energy resources across Australia, India and Bangladesh. It examines rooftop solar and battery uptake, highlighting their role in reducing fossil fuel reliance and grid demand. The analysis provides country-specific recommendations to overcome regulatory barriers, improve financing access and ensure an equitable energy transition.
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OVERVIEW
Background
Electricity systems have traditionally been constructed around large power plants and transmission networks. While these centralised systems continue to dominate, distributed energy resources (DERs) — including rooftop solar, solar irrigation, biogas, and small-scale batteries — are increasingly demonstrating their capacity to deliver affordable and clean energy. Recent global energy supply disruptions, such as those triggered by the West Asia crisis and subsequent fuel price spikes, have highlighted the urgency of accelerating the energy transition. Supported by enabling policies, DERs have the potential to rapidly transform energy systems globally.
Case study: Australia
Status and potential
Australia is a global leader in DER uptake, with approximately 40% of Australian homes having rooftop solar panels. This rise has had a transformative impact on the National Electricity Market (NEM), where rooftop solar grew from near-zero to over 13% of total electricity generation between 2014 and 2025. During the same period, coal generation fell from 75% to 52%. Rooftop solar has driven electricity spot prices close to zero or negative during the middle of the day. The emerging frontier is residential batteries; following the launch of the Cheaper Home Batteries Program in July 2025, Australians installed more than 340,000 small-scale batteries in 10 months, adding 9.4 gigawatt-hours (GWh) of storage capacity. By 2030, the programme is expected to deliver 2 million small-scale batteries, equivalent to 40GWh of capacity. Analysis shows solar and battery systems can lower energy bills by 82–94% when combined with other home upgrades.
Policy and drivers
Early uptake was accelerated by lucrative feed-in tariffs, which reached as high as AUD0.60/kWh between 2009 and 2010. The federal government’s Small-scale Renewable Energy Scheme (SRES), introduced in 2011, created a subsidy through small-scale technology certificates (STCs). Although these incentives have since declined, the falling cost of solar panels and rising retail electricity prices maintain a strong value proposition for self-consumption.
Challenges
Distribution networks must now adapt to significant two-way electricity flows. While initial approaches involved conservative static export limits of 5kW or less, some networks are moving towards flexible exports or dynamic operating envelopes (DOEs). There are also equity concerns, as renters, who comprise over 30% of households, face a ‘split incentive’ problem where they pay bills but landlords are responsible for property improvements. Additionally, apartment dwellers and lower-income households have less access to these technologies.
Recommendations
Policies should focus on ensuring equitable uptake for renters and apartment dwellers. Commercial and industrial (C&I) sites represent underutilised capacity that could be unlocked by addressing complex network tariffs and slow connection processes. Households with large batteries (20kWh and above) should be encouraged to export energy during peak periods via virtual power plants (VPPs). Furthermore, the roll-out of vehicle-to-home (V2H) and vehicle-to-grid (V2G) technologies for electric vehicles (EVs) could unlock significant storage capacity.
Case study: Bangladesh
Status and potential
Bangladesh’s DER sector is gaining momentum due to industrial interest in cheap energy and the difficulty of acquiring land for utility-scale projects. While official data reports 418.1 megawatts (MW) of rooftop solar capacity as of June 2026, IEEFA analysis suggests it has reached 667MW across 239 establishments. If units below 0.15MW are included, total capacity might reach 1,000MW. This expansion contributed to a daytime power demand destruction of up to 6% between April and June 2026. Solar irrigation also offers vast opportunities; replacing one-third of the country’s million-plus diesel-run irrigation pumps could reduce the annual diesel import bill by approximately USD244 million.
Policy and drivers
The government issued net metering guidelines in 2018, which were revised in 2019 and 2025. These revisions increased the installation cap from 70% to 100% of sanctioned load and waived the 10MW capacity limit for single establishments. Rooftop solar, irrigation pumps, and biogas are eligible for low-interest green finance from the Bangladesh Bank and debt finance from the Infrastructure Development Company Limited (IDCOL).
Challenges
High import duties on accessories, ranging from 28.73% to 61.8%, raise project costs. Recent changes mean industrial rooftop solar components now attract a 17% duty, up from 1%. Additionally, more than 93% of solar irrigation capacity is off-grid, leading to systems remaining idle for much of the year without net metering connections. Limited funding size and high collateral requirements from financial institutions also hinder progress.
Recommendations
The government should provide a full duty waiver for all rooftop solar projects to help achieve its target of 10,450MW of renewable energy by 2030. Expanding the green finance base and designing a credit risk guarantee scheme would address financial institutional concerns. SREDA should devise quality check protocols to dispel uncertainty over system performance and monitor net metering applications to avoid delays.
Case study: India
Status and potential
India has a technical rooftop solar potential of 637GW and over 29 million irrigation pumps that can be solarised. DER-solar capacity increased from 1.8GW in FY2018 to 31.5GW in FY2026. However, its share within total renewable energy has remained stagnant at 21–22% due to faster utility-scale expansion. In 2025, industrial and commercial consumers accounted for 23% of new rooftop installations (18% industrial and 5% commercial), while the residential sector drove most other additions via subsidies.
Policy and drivers
Flagship schemes include the PM Surya Ghar Muft Bijli Yojana, which aims to install rooftop systems in 10 million households with subsidies of up to 60%, and PM-KUSUM, which targets 30.8GW of distributed solar for agriculture.
Business models
The CAPEX model dominates under PM Surya Ghar, while Renewable Energy Service Company (RESCO)/OPEX models are well-established in the C&I segment. A utility-led implementation model is also being promoted to simplify consumer adoption and align utility interests with DER expansion.
Challenges
Deployment faces barriers such as DISCOM resistance, subsidy disbursement delays, and limited access to affordable financing for MSMEs. Domestic manufacturing has also struggled to keep pace with demand due to domestic content requirement (DCR) provisions.
Recommendations
Scaling DERs requires harmonising net metering regulations across states and expanding single-window digital platforms for approvals. Strengthening domestic manufacturing and expanding access to blended finance and credit guarantees will be critical. Policies should also support emerging technologies like VPPs and V2G integration.
Lessons learned from three countries
A comparative assessment shows that while all three countries have net metering, Australia has significantly faster connection timelines (three to five days) compared to India (often 30 to 90 days) and Bangladesh (where stakeholders experience delays despite a 10 to 15-day mandate). Australia also leads in smart meter penetration (56% in the NEM), whereas India is targeting 250 million meters and Bangladesh is at an initial stage of adoption.
Conclusion
DERs are reshaping power sectors by reducing grid demand and fossil fuel dependence. Rooftop solar is the dominant DER in all three countries. While Australia experiences a boom in residential batteries, India and Bangladesh could promote similar deployment to shift excess daytime solar generation to evening peak hours. Predictability for utilities can be improved through the gradual adoption of smart meters and streamlined access to low-cost finance for households and small businesses.