India's ambitious journey towards 500 gigawatts of renewable energy capacity is encountering a severe financial roadblock. State-owned electricity distribution companies (discoms) are being forced to sell solar power on energy exchanges at prices far below their procurement costs, leading to significant losses and threatening the country's green energy trajectory.
The Anatomy of a Distress Sale
Trade data reveals a troubling trend: a flood of solar power, combined with regulations mandating its purchase, is triggering distress sales on India's power exchanges. Discoms, saddled with excess renewable energy, often find it more prudent to sell at a loss than to receive nothing, especially during daytime hours when solar generation peaks but demand remains weak.
On the Indian Energy Exchange (IEX), the country's largest power trading platform, prices during peak solar hours have recently plummeted to as low as ₹0.50 per unit. This stands in stark contrast to the ₹2 to ₹3.50 per unit that discoms are typically locked into paying through long-term Power Purchase Agreements (PPAs).
Rajesh Mediratta, MD & CEO of Indian Gas Exchange (IGX), confirmed this development, stating that discoms prefer selling at any price, even at a loss of ₹1-2 per unit, rather than getting no return on the procured power.
Core Challenges: Storage Lag and Rigid Rules
The heart of the crisis lies in a critical mismatch. India's rapid expansion of green energy is dramatically outpacing its capacity to store or manage this power effectively. The infrastructure for Battery Energy Storage Systems (BESS) and enhanced evacuation is not keeping pace with generation growth.
Compounding the problem are the Renewable Purchase Obligations (RPOs). These mandates, set to increase to 43% in five years, force utilities to buy a minimum percentage of power from renewable sources. Discoms are now trapped between these green mandates and a market with limited demand for the intermittent power during specific hours.
Data underscores the scale: on January 1, 2026, solar power prices on IEX hit a low of ₹1.67/unit despite high winter demand. Meanwhile, the short-term electricity market has grown into a ₹1 trillion industry, handling 175 billion units annually.
Mounting Debt and Calls for Rationalization
This financial strain exacerbates the already precarious health of discoms, which are burdened with a cumulative debt exceeding ₹6 trillion, as per a government panel. The ongoing losses are prompting calls from within the industry to slow down green capacity addition and introduce more flexibility in RPOs.
Former power secretary Alok Kumar, now DG of the All India Discoms Association, emphasized the need for "rationalization" of green expansion plans aligned with demand growth. He also suggested that RPO norms should be flexible and state-specific.
Experts are advocating a strategic shift. Sanjeev Aggarwal of Hexa Climate Solutions noted that the trend is a "wake-up call signalling the end of blind capacity addition." The focus, he argues, must move from 'plain vanilla solar' to Firm and Dispatchable Renewable Energy (FDRE) and Round-the-Clock (RTC) projects, which combine generation with storage for grid stability.
Aggarwal also highlighted the need for thermal flexibilization—retrofitting coal plants to ramp down during solar hours—and shifting agricultural loads to daytime to act as a natural demand balancer.
The Road Ahead: Storage and Realistic Planning
The numbers reveal the acceleration and the gap. As of November 2025, India's total renewable capacity stood at 253.96 GW, with 44.51 GW added in 2025 alone. However, the government's target to auction 50 GW annually has led to a situation where 43 GW of proposed green capacity, involving a ₹2.1 trillion investment, lacks PPAs.
Furthermore, states like Rajasthan and Gujarat are already seeing curtailment of green power generation. A representative from Punjab State Power Corporation Ltd expressed hope that the issue would resolve as BESS infrastructure comes online.
This crisis presents a critical juncture for India's energy transition. Balancing ambitious renewable targets with grid stability, financial viability of discoms, and the urgent need for storage and flexible demand management will be key to sustaining the green momentum.
