India's renewable story needs better forecasting, stronger infrastructure

India’s ambitious plans for renewables need a renewal. Until yesterday, it was a problem of scarcity. Today, it is a case of excess, of demand not keeping pace with supply. 

 

The devastating floods across northern India turned the spotlight on the fact that a surfeit of water is as disastrous as a scarcity of rain. Besides causing collateral damage by contracting India’s power demand in the first quarter of the current financial year (Q1FY26), for the first time since the pandemic, the floods brought to the fore an issue renewable developers, utilities, and policymakers have been grappling with: How to integrate large renewable capacities with India’s coal-fed generation mix amid volatile demand for electricity.  

Tendering by central agencies for solar and wind power surged sixfold, to over 60 gigawatts (Gw) annually, in the last two fiscals because New Delhi feared that the 10-12 Gw bids of the past were insufficient to meet the ambition of deploying 

625 Gw of non-fossil fuel — including 125 Gw for green hydrogen production —  by 2030.  

 

But the inability to match the demand for renewables with capacity creation has utilities worried. The concern is that if the issue is left unaddressed, it may crimp installations, said the head of a large solar developer. “Issuing tenders and completing auctions alone is never the right solution,’’ he said. “It must be paired with demand and transmission.’’  

Stakeholders, industry experts, and government officials all point to a growing disconnect between ambitious renewable targets and robust tendering, and the cables and substations needed to carry the power, besides customers keen on clean electricity. 

Before we think of adding another 60 Gw of renewable capacity next year, ask where’s the demand, said Ghanshyam Prasad, chairperson of the Central Electricity Authority (CEA), an agency that charts the country’s electric future, on the sidelines of a recent industry event. 

Vineet Mittal, chairman of Avaada group, one of India’s biggest renewables developers, added that Prasad had rightly pointed out that if capacity addition races ahead of real demand, curtailment risks could rise. 

India is not an outlier here. In Brazil, Latin America’s biggest economy and a biofuel leader, curtailment of renewable generation has become the biggest hurdle for investments, with solar generation cuts averaging 20 per cent last month from 12 per cent a year  earlier, according to the  Brazilian government data. 

 

Cutting down on  clean power 

The problem with accommodating capacity additions —arising from India’s record renewables’ tendering, all-time high installations, and the highest clean generation — ignores an old question: Where is the infrastructure needed to carry clean power to consumers, asked Pinaki Bhattacharyya, CEO, Ampin Energy Transition. 

As a result, curtailments have already begun in states like Rajasthan, India’s most endowed solar state, Bhattacharyya said. Nearly 4 Gw of wind-solar energy had been curtailed in Rajasthan since March, with renewable projects told to reduce over half their output last month, clean energy consultant Mercom said.   

Bhattacharyya, whose firm is at the receiving end of such curtailment, said the epidemic of output cuts could soon spread to other states if the Centre does not add adequate transmission lines and substations.  

“Substation grid quality and connectivity are major roadblocks,’’ said Hanish Gupta, founder, Sunkind India, which is investing 

in 4 Gw solar equipment. “Even after land is secured, weak grids and lengthy  reactive power studies delay progress.” 

  Not quite in agreement Curtailments, which are  haemorrhaging developers, isn’t the only issue. Delays by discoms in signing power purchase agreements  (PPAs), too, are hurting capacity addition, industry officials said.   

 

Industry data shows that state utilities delayed signing 40-55 Gw of PPAs, around half of the total projects awarded by central agencies since FY24. 

“Pending PPAs relate to systemic bottlenecks, with utilities delaying on fulfilling their renewable purchase obligations,’’ Mittal said.    

Alok Kumar, director general, All India Discoms Association, defends their case. The utilities, he said, are unable to ascertain the power demand they will have in 18-24 months, the time it takes to produce power.  

Kumar, a former power secretary, elaborated that utilities cannot be made fully responsible because of the lack of visibility over power demand, intermittency of supply, and inadequacy of affordable battery storage. Utilities must also be cautious so as not to hurt the operations of coal-fired plants, which account for over 70 per cent of the country’s power generation, he added.  

Thermal generators cannot be made to switch off or slash use during the day when solar output is at its peak and switch on at night, Prasad said, pointing to the plants’ technical bottlenecks. Moreover, the umbilical cord between utilities and thermal generators is strong — discoms have agreed to PPAs with new coal-fired projects at around ₹6 per kilowatt-hour (Kwh) but hesitate to pay ₹2.50 for clean power, an industry official said.  

“The integration of renewable energy has to be at a pace that does not displace  existing load,’’ Kumar said. “It should be for additional load, so that you do not have the problem of backing down and all.”   

Sunil Jain, founder, Sundev Renewables, added that the government had realised that issuing tender after tender wasn’t the solution. “It needs to synchronise tendering with demand.”  

He attributed the delay in PPAs to bargaining tactics by utilities, which are seeking further discounts on the winning tariff bids. For instance, utilities want developers to absorb a portion of interstate transmission system charges (ISTS) of 40 paise to  ₹1 per Kwh to wheel the power between states. (ISTS was waived off till June, but utilities must bear 25 per cent of the cost now, and all charges by 2028.)  

Utilities found it easier to sign PPAs in the past. But then in the last two years, the government increased tendering for solar awards fivefold, something the utilities, which were prepared for 10-12 Gw of annual tendering, weren’t ready for, said Vinay Rustagi, chief business officer of module manufacturer Premier Energies.  

It was a deluge of renewable capacity that washed away the utilities’ appetite for PPAs, said a developer. Rustagi expects tendering to average only 20-25 Gw a year going forward to enable discoms to digest renewable power better.  

Forecasting conundrum 

In FY24, nearly 70 Gw was tendered and 40 Gw awarded — over five times previous levels. In the first half of 2025, around 73 Gw was bid out, including hybrid wind-solar projects, industry data shows.    

Avaada’s Mittal stresses the need for accurate demand forecasting and system coordination, matching generation with evolving consumption patterns — something that’s easier said than done.   

Take the case of electricity demand this summer. Anticipating a surge in peak power demand, India increased overall capacity by 33 Gw to 475 Gw, led by renewables, in FY25, CEA said.  

But peak power use declined to around 243 Gw, compared to about 250 Gw in the summer of 2024. Utilisation of thermal power plants fell to 67 per cent in June from 75 per cent a year earlier.  

“We experienced a milder summer and an early, intense monsoon, which reduced cooling demand,’’ said Viral Thakker, partner, climate, Deloitte, South Asia.  

Acknowledging the growing mismatch between awards and PPAs, CEA’s Prasad said: “We must have a kind of balance so that whatever comes into the system gets tied up and utilised.”  

Reading demand correctly still doesn’t explain why projects are stranded, Bhattacharyya said. “We cannot get to the 500 Gw target without central transmission infrastructure in place to evacuate the power,” he added. The intermittent nature of  renewable supplies has been stressing India’s national and state transmission grids where  new connectivity grants have  been delayed, said Sanchit Makhija, a partner at consultancy Kearney.  

 

The way around 

Bhattacharyya is of the view that levying penalties for transmission delays might speed up building substations.   

Ampin Energy is managing such delays by taking the risk of constructing solar projects on its balance sheet. Utilities are ready to sign PPAs with ready projects rather than wait for 18 months for plants to begin production — something like house buyers preferring ready-to-move-in apartments, he said.  

The government is addressing transmission gaps by offering dual connectivity for solar and wind projects, Prasad said. That means solar power will have priority during solar hours from the substation, but at other hours, other generators can also use that facility. The same will apply to battery storage  systems. “This is already on the table.”    

 

Current tariffs from battery storage systems are unaffordable, Kumar said. Uttar Pradesh has awarded a recent tender for solar plus battery with a developer, ensuring four hours of daily supplies. The tariff is ₹6.60 per Kwh with a viability gap funding (VGF) of 30 per cent. “If VGF is not there, it will hit around ₹9,” he added. Many battery energy storage system (BESS) awards do not account for the downtime on battery operations when announcing tariffs, he added.   

The lesson from this summer is not to slow renewables, but to strengthen flexible grid systems and pumped/BESS storage to manage seasonal dips, Mittal said. He suggests improving demand forecasting to avoid overbuild mismatches.  

“The short-term dip (in power use) is a cautionary signal, not a structural barrier,’’ Mittal said, adding that Prasad’s caution is a reminder that India must balance ambition with absorptive capacity.