What’s happening?
India’s renewable push is hitting a financial stress point.
During peak daytime solar hours, state discoms are forced to sell excess green power on exchanges at deep losses due to oversupply, weak demand, and limited storage.

• Exchange prices: ₹0.50–1.67/unit
• Long-term solar PPAs: ₹2–4/unit
• Selling at a loss is better than zero recovery

Why This Is Happening

1️⃣ Oversupply vs Demand
Renewable capacity is growing faster than:
– Electricity demand
– Storage capacity
– Evacuation infrastructure
Solar generation peaks when demand is weakest.

2️⃣ Rigid RPO Mandates
Discoms must buy renewable power regardless of demand.
RPO targets will rise to 43% in 5 years, pushing excess power to exchanges.

3️⃣ Lack of Storage & Flexibility
– Battery Energy Storage Systems are inadequate
– Thermal plants can’t back down efficiently
– Time-of-Day tariffs remain limited

Price & Market Reality

• Short-term power market: ~₹1 trillion
• Annual exchange volume: ~175 bn units
• RTM prices have hit zero on some days

Tariff comparison:
– Plain solar/wind: ₹2–4/unit
– Solar + storage (FDRE): ₹2.9–3.6/unit
– Round-the-clock RE: ~₹5/unit

Rising Stress on Discoms

• Total discom debt: ₹6+ trillion
• Solar: 26% of installed capacity
• Wind: 10.6%

Discoms are stuck between mandatory green buying and weak monetisation of surplus power.

How the Industry Is Responding

• Shift toward FDRE & RTC projects
• Storage-linked tenders gaining momentum
• Focus on grid balancing & demand-side measures

Investor Takeaway

India’s green transition isn’t derailing — it’s maturing.
The shift is from capacity addition to dispatchability, grid economics, and quality of supply.

Expect:
• Slower solar auctions
• More storage-linked tenders
• Policy recalibration, not reversal