India's Green Energy Ambitions Hit Transmission Roadblock
The Indian government has initiated urgent measures to address a growing crisis in the renewable energy sector, where surplus green power production is colliding with insufficient transmission infrastructure. This intervention follows sweeping production cuts imposed on solar and wind farms in Rajasthan and Gujarat, two of India's primary renewable energy hubs.
Production Cuts Trigger Government Response
The Ministry of New and Renewable Energy (MNRE) has directed the Central Electricity Authority (CEA) and Grid Controller of India Ltd (Grid India) to conduct a joint study aimed at resolving the grid stability issues causing these production curtailments. The grid controller orders these cuts to maintain system stability, but they result in significant financial losses for developers and threaten to derail India's ambitious renewable energy targets.
The scale of the problem is substantial. According to UK-based energy transition think tank Ember, recent curtailments in Rajasthan and Gujarat were equivalent to 18% of India's average monthly solar generation of 13 terawatt hours. This resulted in compensation payouts ranging from ₹575 to ₹690 crore to affected developers, though industry sources indicate these payments often fail to cover the full extent of losses incurred.
The Root Cause: Transmission Lagging Behind Generation
The fundamental issue stems from India's rapid renewable capacity expansion outpacing transmission infrastructure development. While India has achieved 258 gigawatts of renewable energy capacity—including 135.80 GW of solar and 54.51 GW of wind—the transmission system struggles to evacuate this power efficiently. The installed transmission capacity exceeds 500,000 circuit kilometers, but additions have slowed, with only 5,077 ckm added between April and December of FY27, representing a 14.8% decrease from the previous year.
"Curtailment is a clear indicator that renewable capacity growth is outpacing the system's ability to absorb power efficiently," said Neerav Nanavati, CEO of BluPine Energy, an Actis-backed renewable generator with over 3 GW portfolio. "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."
Technical Challenges and Market Realities
The technical challenge involves managing power system oscillations—variations in voltage, current, power, and frequency that can amplify during periods of excess production or weak evacuation. These oscillations can lead to instability, equipment damage, or even blackouts, forcing grid controllers to order production cuts as a preventive measure.
Compounding the technical issues are market realities. Many state power distributors continue signing expensive thermal power purchase agreements rather than opting for cheaper green alternatives. Additionally, approximately 43 GW of proposed green power capacity representing ₹2.1 trillion in potential investment lacks power purchase agreements and power supply agreements.
The situation is particularly acute during midday hours when solar generation peaks. According to the National Solar Energy Federation of India, curtailment in Rajasthan reached about 3 GW with up to 100% cuts occurring between 11 am and 2 pm. Ember's analysis indicates that even after ramping down coal plants to their minimum technical limits, grid operators must curtail solar generation to maintain stability, especially during periods of lower-than-forecast demand.
Industry Perspectives and Proposed Solutions
Industry leaders emphasize the need for comprehensive solutions. "Market-based dispatch and storage integration would significantly reduce curtailment risk and lower system costs in the long run," noted Akshay Hiranandani, CEO of KKR-backed Serentica Renewables, which manages over 9 GW of green power assets. "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."
Varchasvi Gagal, MD and CEO of Datta Power Infra, highlighted the financial impact: "Curtailment reduces capacity utilization factors, which in turn reduces project internal rates of return. This has severe implications in India's highly tariff-competitive renewable energy market."
The industry consensus points toward several critical measures:
- Strict enforcement of renewable energy's "must-run" status
- Guaranteed compensation for deemed generation during curtailment
- Better alignment between transmission commissioning and renewable capacity addition
- Strengthened power purchase agreement protection mechanisms
- Accelerated deployment of battery storage systems
Infrastructure Developments and Future Outlook
Despite current challenges, transmission infrastructure is gradually expanding. The power ministry announced on January 22 that inter-state transmission projects under implementation will add approximately 40,000 ckm of transmission lines, while intra-state projects will contribute another 27,500 ckm to enhance grid reliability and evacuation capability.
Recent commissioning includes Power Grid Corporation's 765 kV double-circuit Bhadla II–Sikar II transmission line and the 765 kV double-circuit Khetri–Narela line connecting Delhi and the National Capital Region with Rajasthan. These developments aim to improve connectivity between high-generation regions and major consumption centers.
As India continues targeting annual auctions of 50 GW of renewable power, the success of this ambitious expansion will depend on how quickly system flexibility can be enhanced through storage solutions, responsive grid operations, and market frameworks that properly value balancing services. The joint CEA-Grid India study represents a crucial step toward converting renewable capacity additions into reliable, economically sustainable power supply.
