The new and renewable energy ministry has tasked the Central Electricity Authority (CEA) and the Grid Controller of India Ltd (Grid India) to jointly explore a resolution to this vexed issue, two people aware of the development said. The CEA is India’s apex power sector planning body, while Grid India is the national power grid operator. Both agencies would conduct a joint study to this effect following the ministry’s direction.
The Centre’s move comes after vast production cuts ordered in Rajasthan and Gujarat, two of India’s green power engines. The curtailment, equivalent to 18% of the average monthly solar generation of 13 terawatt hours, resulted in a compensation payout of ₹575-690 crore to the developers, according to Ember, an energy transition think tank based in the UK. Developers often make losses despite receiving compensation from a reserve fund, as it doesn’t make up for all the losses incurred.
“At a recent meeting of all stakeholders, the ministry of new and renewable energy (MNRE) asked the CEA to look at the issue and conduct a study on ways to reduce oscillations in the power system, which would help bring in more stability to the transmission system. The CEA and Grid India will together carry out the study. The ministry is also constantly monitoring the issue,” said one of the two people cited above, requesting anonymity.
Oscillations
Oscillations refer to variations in voltage, current, power and frequency in the power system. While these variations are small during normal operations, they can amplify at times of excess production or weak evacuation, leading to instability, equipment damage or blackouts. The grid controller steps in at such times to order production cuts.
The root cause is that while India has raced to put up solar and wind power projects, the transmission capacity to evacuate that power is still being built, and battery storage mechanisms are not fully in place either. To top it all, many customers – primarily power distributors in states – are signing up for expensive thermal power, given they are more reliable.
India currently has a renewable energy capacity of 258 giga watt (GW), of which solar accounts for 135.80GW, and wind for 54.51GW. The installed transmission capacity is over 5 lakh circuit kilometers (ckm). In the April-December period of FY27, 5,077 ckm of transmission lines were added, 14.8% less than 5,960 ckm in the same period of the last fiscal.
However, the power ministry said on 22 January that inter-state transmission projects being built will add approximately 40,000 ckm of transmission lines and another 27,500 ckm being implemented under intra-state transmission projects will enhance grid reliability and power evacuation capability.
Queries mailed to the energy ministry, CEA and Grid India remained unanswered.
Capacity outpacing absorption
Neerav Nanavati, chief executive officer (CEO) of BluPine Energy, an Actis-backed renewable energy generator with an over 3GW portfolio, said that curtailment is a clear indicator that renewable capacity growth is outpacing the system’s ability to absorb power efficiently.
“When clean energy is backed down during predictable high-generation periods, it points to a shortfall in system flexibility rather than a lack of generation. For developers, this has direct implications for project economics and risk allocation, particularly for solar-heavy portfolios and projects with greater market exposure. It reinforces the need to factor system flexibility and grid behaviour more explicitly into investment decisions,” said Nanavati.
With targeted annual auctions of 50GW of renewable power, capacity addition has sped up.
“The next phase of renewable scale-up will depend on how quickly flexibility is embedded into the power system through storage, more responsive grid operations, and market frameworks that value balancing. Converting capacity additions into reliable supply and sustainable returns will require flexibility to scale in step with renewable growth,” Nanavati said.
According to the National Solar Energy Federation of India, a lobby group, the green power curtailment in Rajasthan was about 3GW and up to 100% during 11 am to 2 pm, a time when solar power peaks.
Mid-day gush
According to the UK’s Ember, authorities are forced to order the solar cut because other sources (such as thermal power) could not be turned off far enough to accommodate the gush of midday solar power.
“These conditions occurred, for example, when demand was lower than forecast, a common occurrence in 2025 due to exceptionally mild temperatures. Demand fell in October 2025, with the midday fall twice that in the evening. In these cases, even after ramping down the coal fleet to its minimum technical limits, the system operator had to curtail solar generation to ensure the grid remained stable,” an Ember report said.
Akshay Hiranandani, CEO of KKR-backed Serentica Renewables, noted that market-based dispatch and storage integration would significantly reduce curtailment risk and lower system costs in the long run. “Unless addressed through better transmission planning, storage integration, strict compensation mechanisms, and discom reforms, curtailment will continue to slow down investment and raise renewable tariffs,” he added. Serentica has a cumulative portfolio of over 9GW green power, including solar and wind.
Market-based dispatch is the centralized, day-ahead, auction-based mechanism largely transacted through exchanges.
Meanwhile, discoms are selling renewable energy on electricity exchanges at a price lower than what they had purchased it for. Also, several states including Uttar Pradesh, Bihar, Assam and West Bengal have signed costly power purchase agreements (PPA) for expensive thermal power rather than cheaper green power; and 43GW green power capacity involving an ₹2.1 trillion proposed investment doesn’t have PPAs and power supply agreements (PSAs) in place.
New lines
This comes in the backdrop of recent commissioning of key transmission lines in the northern and north-western region that have the maximum potential and installed capacity of solar power generation. State-run Power Grid Corp. of India Ltd last month commissioned the 765 kV double-circuit Bhadla II–Sikar II (second circuit) transmission line. Also, the 765 kV double-circuit Khetri–Narela transmission line connecting Delhi and the National Capital Region with Rajasthan was commissioned in December.
Varchasvi Gagal, managing director and chief executive officer of Datta Power Infra Pvt. Ltd, a company which is both in transmission infrastructure construction and solar power generation said, “Curtailment of renewable energy (solar and wind) has emerged as a significant pain point for power developers. When RE generation is curtailed, power is available but cannot be evacuated or sold, leading to direct revenue loss. Curtailment also reduces the capacity utilization factor (CUF), which in turn reduces project IRRs (internal rate of return), which have a severe impact in India’s highly tariff-competitive RE market. Curtailment risk has shifted from the grid and distribution companies (discoms) to developers, increasing the risk profile of RE projects despite their ‘must-run’ status.”
He added that it is critical to strictly enforce must-run status, ensure compensation for deemed generation, align transmission commissioning with renewable energy capacity addition, and strengthen power purchase agreement (PPA) protection mechanisms.
