The pricing of electricity in India has always been influenced by the centralized nature of distribution networks, tariff regulation, and cross-subsidies. However, with the increasing adoption of solar power in farms, workshops, and small-scale commercial setups, a new question is being raised: What if locally produced electricity becomes economically tradable at the point of production?
Increasingly, Indian farmers and small businesses are generating more solar power than they require during peak hours of the day. Conventionally, this surplus has been met by distribution companies (discoms) based on predetermined tariffs. However, new trials involving the use of on-chain settlement systems are now making it possible to have more accurate accounting, quicker settlement, and non-traditional valuation methods for surplus electricity. This development is part of the larger blockchain green power revolution, in which blockchain technology is being used for energy economics rather than for trading or speculation.
India’s Electricity Distribution Model in Context
The Indian electricity industry is based on state distribution entities that handle billing, metering, and collections. Although this framework promotes universal access, it also causes inefficiencies.
Key aspects of the existing framework:
Tariffs are regulated by state electricity regulators
Agricultural and domestic subsidies are met through higher commercial tariffs
Netted settlement cycles for net metered consumers
Lack of transparency in billing and reconciliation
For small solar producers, particularly in rural and semi-urban areas, such limitations may lower the economic viability of surplus electricity production.
Rise of Distributed Solar in Farming and Small Businesses
The adoption of solar power has increased from utility-scale to distributed solar, including:
Farm solar water pumps
Rooftop solar installations on warehouses and retail outlets
Small agro-processing units
Cold storage and dairy units
These solar installations often produce peak power during the daytime when demand is low. This leads to an underutilized resource unless it is efficiently monetized.
Limitations in Traditional Solar Monetization
The current system is such that surplus solar power is typically managed by:
Net metering agreements
Fixed Feed-in tariffs
Long term power purchase agreements
Although effective, these systems are subject to discom policies, state approvals, and billing cycles. These can lead to delayed payments and a lack of pricing variability for small solar producers.
What Are On-Chain Settlements in the Energy Industry?
On-chain settlement is the process of recording energy production and consumption information on a blockchain ledger. In India, experimental frameworks such as the emerging India Energy Stack—sometimes discussed in conjunction with blockchain-based energy accounting models including Power Ledger’s blockchain technology—are exploring how digital infrastructure can standardize and verify distributed energy transactions.This means that there is no replacement of the energy grid but rather an improvement in the way transactions are recorded and settled.
Key elements of this technology are:
Smart meters that record real-time information
Blockchain ledgers where energy information is verified and recorded
Smart contracts that automate the settlement process
Tokens that represent units of energy for accounting purposes
This technology is more focused on transparency, auditability, and efficiency rather than cryptocurrency transactions.
Economic Impacts of On-Chain Accounting in the Energy Industry
With the change in the settlement logic from a monthly billing cycle to near real-time reconciliation, there are economic impacts that are measurable.
Some of these impacts are:
Faster realization of the value of excess energy
Decentralized systems that do not rely on intermediaries
Micro-transactions that are possible
Improved cash flow forecasting
For farmers and small businesses, this means that there is more granular control over energy-related income and expenses.
How Solar Monetization Using Blockchain Usually Happens
Solar energy is produced through solar panels
Solar energy production and consumption are measured through smart meters
Excess solar energy production is recorded in a blockchain
Solar energy units are used to represent energy for the purpose of settlement
Solar energy units are calculated through smart contracts
Settlement is done automatically according to pre-set rules
For example, in a hypothetical or pilot-driven scenario, a farmer in Uttar Pradesh generating surplus daytime solar power could have that excess recorded on a blockchain-based settlement system and credited through interoperable infrastructure to a commercial consumer—such as a retail shop in Delhi—under predefined regulatory conditions. In such a case, the blockchain would function as a transparent accounting and settlement layer, while the physical electricity would continue to flow through the existing grid infrastructure.
In most cases, the final settlement of payments is done in fiat money, and blockchain is only used as a verification and settlement platform.
Comparison of Settlement Models
Criteria | Discom-Based Settlement | On-Chain Settlement |
Billing frequency | Monthly or longer | Near real-time |
Transparency | Limited visibility | Immutable ledger |
Pricing structure | Fixed or regulated | Demand-responsive |
Transaction costs | Higher for small volumes | Lower for micro-units |
Data auditability | Manual reconciliation | Automated verification |
Why Farmers Are Assessing On-Chain Solutions
The energy consumption pattern in agriculture is mostly seasonal, intermittent, and heavily driven by daylight hours.
The prime drivers are:
Solar power output exceeding irrigation requirements
Irregular compensation for feed-in electricity
Requirement for energy transparency
Need for predictable settlement times
On-chain solutions enable greater visibility into the amount of electricity produced, consumed, and credited, thus aiding better decision-making at the farm level.
Small Businesses and Cost Optimization
For small businesses, electricity costs have a direct impact on their bottom line.
The usual beneficiaries are:
Small-scale manufacturing facilities
Retail businesses with refrigeration units
Service centers and workshops
Rural businesses with hybrid energy systems
Decentralized settlement layers will enable businesses to better synchronize energy consumption with prices, thus aiding efficiency in the blockchain green power revolution.
Regulatory and Operational Constraints
Despite growing interest, adoption remains gradual due to systemic constraints. Even in structured digital initiatives such as the India Energy Stack concept, which may integrate blockchain layers like Power Ledger’s technology for distributed accounting, implementation depends heavily on regulatory alignment and state-level approvals.
Common challenges:
State-specific electricity regulations
Approval requirements for grid interconnection
Metering and data standardization
Digital infrastructure readiness
As a result, most implementations currently operate as pilots or controlled deployments rather than fully commercial systems.
Environmental and Grid-Level Considerations
Beyond financial outcomes, these systems influence broader energy dynamics.
Potential system-level impacts:
Reduced strain on centralized grids
Improved renewable energy absorption
Lower transmission losses
Encouragement of localized generation
While not a standalone solution, on-chain settlements complement renewable integration efforts.
Conclusion
The monetization of solar power via on-chain settlement systems is an incremental development and not a disruption in the power sector in India. For farmers and small businesses, it provides greater transparency, quicker settlement, and more flexible pricing of their surplus electricity.
As the regulatory environment develops and the digital infrastructure becomes more widespread, such approaches could eventually have a bearing on how decentralized energy is accounted for and compensated. In the wider context of the blockchain green power revolution, on-chain settlements are a technology enabler.
Frequently Asked Questions (FAQs)
1. What does on-chain settlement mean in simple terms?
It means recording and settling energy transactions using blockchain technology for transparency and automation.
2. Is cryptocurrency mandatory in these systems?
No. Blockchain can be used solely for data and settlement, with payments handled in traditional currency.
3. Can small producers legally sell surplus solar power in India?
Yes, subject to state regulations, grid connectivity rules, and approved metering frameworks.
4. Does this model eliminate electricity distribution companies?
No. It typically works alongside existing discom infrastructure.
5. Is blockchain-based energy settlement widely implemented in India?
At present, it exists mainly in pilot projects and research initiatives.
