The International Energy Agency (IEA) is backing the India Energy Stack, a key digital public infrastructure aimed at standardising and enhancing interoperability across the power sector, said the IEA executive director Fatih Birol.

In an exclusive interview to ET, he said India’s efforts are timely and aligned with the overall plan of the IEA for a digital energy grid (DEG), signalling deeper collaboration between the international energy watchdog and the country.

“Digitalisation is a powerful tool that can undoubtedly support the evolution of the electricity sector through grid optimisation, demand-side management and even weather forecasting,” Birol said.

In February, the Foundation for Interoperability in Digital Economy (FIDE) and the IEA had published a white paper on DEG, whose foreword was co-authored by Nandan Nilekani, non-executive chairman of Infosys, and Birol. The report proposed a future where every home with a solar panel, or an electric vehicle (EV) battery, would be generating, storing and trading energy instead of just consuming it.

ET reported on June 28 that the government is working to launch a digital platform to enhance coordination, data sharing and innovation in the power sector. A 17-member task force set up for the purpose comprises Nilekani; former director general of the Unique Identification Authority of India Ram Sewak Sharma as the chairperson and former power secretary PK Pujari as the vice chair.

The IEA chief also commented on the critical link between artificial intelligence (AI) and energy. With India’s rapidly expanding digital economy and efforts to harness the power of AI, he emphasised the need for a "sustainable, affordable and uninterrupted supply of electricity for data centres”.

Birol said the data centres themselves will need to deploy the most efficient technologies and practices. “Doing so will ensure that the energy and tech sector are partners in the growth of this critical technology," he said, indicating the need for proactive policymaking to foster this partnership.

The IEA views India’s Unified Payments Interface (UPI) as a prime example of successful digital public infrastructure thinking. Birol said the UPI success story, "driven by public infrastructure principles, offers valuable lessons on innovation and interoperability".

While acknowledging the unique challenges of the energy sector, such as balancing a variable and decentralised grid, he suggested that applying lessons from UPI would require “sector-specific solutions and understanding the potential and limitations of direct replication”.

On the practical application of the DEG, Birol highlighted its potential to address challenges such as frictionless subsidy distribution and effective solarisation, a critical issue in countries like India which have high agricultural electricity use.

“Digital public infrastructure can play a critical role in improving transparency, targeting and efficiency in areas like rooftop solar adoption,” Birol said, adding that the IEA would support India’s efforts as it considers improving rooftop solar penetration and broader digitalisation for energy access a priority.

A pilot DEG project is expected to be shortly launched in Lucknow, ET had reported on June 18. It will be based on Unified Energy Interface, a digital architecture similar to the UPI. Sector watchers had said this project and lowering manual intervention in the power sector was expected to reduce costs to the end consumers.

The IEA’s strong endorsement and offer of support for the India Energy Stack underscores the growing recognition of digital infrastructure as a cornerstone for future energy security, efficiency and sustainability, particularly as India navigates its rapid energy transition.

The India Energy Stack will aim to tackle key challenges such as fragmented systems, and support India’s push towards a $5 trillion economy and net zero targets, the power ministry had said last week.

Rapid growth in renewable energy, electric vehicles and consumer participation in energy markets is transforming the sector, but fragmented systems and a lack of seamless digital integration remain key barriers, it had said.

The Nilekani-led task force will be supported from funds allocated under the Revamped Distribution Sector Scheme of the power ministry.

“A correction of up to 25% in generation, transmission and distribution costs is the desired outcome of this exercise,” an official aware of the project had told ET on June 18.