India curtailed 8,133 gigawatt-hours (GWh) of solar power between April and June 2026, close to 11% of all the solar generation available in that window, even as electricity demand hit a record. Speaking at the BNEF Summit in New Delhi on 21 August, the Ministry of New and Renewable Energy's (MNRE) Renewables Secretary, Santosh Kumar Sarangi put the consequence bluntly: projects without battery storage are "unlikely to find buyers." For a C&I buyer weighing a new solar or open-access contract, that is no longer a grid-operations footnote. It is starting to shape which projects get built at all.
What curtailment is, and why it is rising
Curtailment means the grid operator orders a solar or wind plant to reduce output below what it could physically generate, usually to keep the grid stable. Under India's grid code, solar and wind normally carry "must-run" status, so curtailment is meant to be the exception, triggered by genuine grid-security constraints, not routine load management.
The exception is becoming routine because of a mismatch between when solar generates and when coal can step back. India's coal fleet, still the backbone of grid balancing, cannot run below a technical minimum load of roughly 55% of rated capacity without risking instability. When midday solar output pushes the power coal needs to supply below that floor, the grid cannot simply switch coal off for a few hours; instead, it curtails solar. Energy think tank Ember estimates this floor was breached in more than half of all midday dispatch intervals by April 2026, and that roughly 10 GWh of battery storage, discharged during the same midday window, would be enough to absorb the surplus that coal currently cannot.
The scale of the problem: 42 GW without buyers
Sarangi's remarks put a number on the commercial fallout: almost 42 gigawatts (GW) of planned renewable capacity in India has yet to sign an offtake contract. He broke this down into overlapping risk categories - roughly 18 GW of solar-only projects, 14-15 GW of capacity that was awarded at comparatively high prices, and 21 GW with only part-time grid access - all facing the same underlying problem: buyers are increasingly reluctant to sign long-term power purchase agreements (PPAs) for capacity that the grid may not reliably let them draw when they need it, or that a developer cannot reliably deliver.
The market's response: storage becomes the entry ticket
Developers are adapting by pairing generation with storage before they go looking for buyers, rather than after. That shift shows up clearly in the tender market. The Solar Energy Corporation of India's (SECI) FDRE-RTC tender - firm, dispatchable renewable energy supplied round the clock, requiring storage to smooth output - discovered a lowest tariff of Rs 5.25 per kWh in August 2026, with 1 GW awarded to bidders including Hero Future Energies (120 MW) and Juniper Green Energy (230 MW). A separate SECI tender, FDRE-IX, is seeking 1,200 MW of capacity paired with 4,800 megawatt-hours (MWh) of battery storage - four hours of backup at full contracted output - making it one of the largest battery tenders India has run to date.
Product | What it is | What it solves |
|---|
Standalone solar PPA | Power delivered only when the sun shines, no storage | Cheapest on paper, but exposed to curtailment and buyer reluctance |
Solar-only, open access | C&I buyer contracts directly with a generator via wheeling | Buyer bears more of the variability and curtailment risk |
FDRE / RTC (storage-backed) | Solar or wind paired with battery storage, dispatched to a schedule | Firmer supply profile; developer absorbs more of the balancing burden |
What it means commercially for C&I buyers
This changes the calculus for anyone evaluating a new solar or open-access supply contract, in three concrete ways.
First, curtailment risk is not evenly shared. When a plant is curtailed for genuine grid-security reasons, generators can in principle claim "deemed generation" compensation at the PPA tariff, but that mechanism is not automatic or uncontested in practice. Mercom India has reported a Power System Operation Corporation (POSOCO) submission to the Appellate Tribunal for Electricity finding that only 5.26% of curtailment claimed by certain Tamil Nadu solar projects was actually justifiable on grid-security grounds - evidence that curtailment volumes and compensation are genuinely disputed, not a formality either side can assume will resolve in their favour.
Second, fewer developers are willing to sign solar-only PPAs at all in the current environment, per Sarangi's comments, which narrows the pool of counterparties for a buyer set on the cheapest possible structure and pushes negotiating leverage toward projects that already carry storage.
Third, storage-backed products are pricing competitively. Rs 5.25/kWh is a wholesale, ISTS-connected auction tariff discovered through SECI's tender process, not a retail offer available to any individual C&I buyer, but it is a useful market signal: round-the-clock, storage-backed renewable supply is no longer a large cost premium over standalone solar in India, even before accounting for the value of avoiding curtailment risk.
What Indian businesses should consider
Ask what happens to your bill when the plant is curtailed. Review whether your PPA or open-access agreement assigns curtailment risk to you, to the generator, or splits it, and under what evidentiary standard a curtailment event is verified.
Weigh solar-only against storage-backed supply on a risk-adjusted basis, not headline tariff alone - a slightly higher Rs/kWh rate on an FDRE or RTC contract may be worth more reliable delivery during peak-demand hours.
Ask prospective developers directly about their offtake and storage plans. Given how explicitly MNRE has flagged storage-less capacity as struggling to find buyers, a developer without a storage strategy may face financing or delivery risk of its own.
Avco Energy's View
In our reading, this is less a temporary grid hiccup than a structural signal that India's solar buildout has outpaced the flexibility of the rest of the grid, at least for now. We expect storage-backed products to keep gaining share of new C&I contracting relative to solar-only supply over the next few years, not because regulation forces it, but because it is becoming the more bankable and, increasingly, the more competitively priced option.
That does not mean every C&I buyer needs on-site batteries today. For many, the more immediate action is simply reading the curtailment and compensation clauses in a prospective PPA carefully, and asking a developer hard questions about how firm their supply commitment really is.
What to watch next
Watch how SECI's FDRE-IX results, once bids land, compare with the Rs 5.25/kWh benchmark set by FDRE-RTC - a sustained gap either way would say something about how quickly storage-backed supply is becoming genuinely cost-competitive with standalone solar in India, not just operationally preferable.
