Curtailing renewables to provide flexibility is an inefficient system response

On multiple occasions in 2025, renewable energy curtailment became an unavoidable system response. However, as the share of renewables, particularly solar, continues to increase, reliance on its curtailment as a last resort becomes increasingly inefficient and unsustainable.

Even though renewable generators receive compensation for curtailed energy when emergency TRAS-down is triggered, the system experiences a notional loss. This is because the grid misses out on clean electricity. It is a missed opportunity to displace fossil fuel generation and reduce system emissions and economic inefficiencies. While payment mechanisms mitigate the financial impact on generators, curtailing solar effectively wastes the underlying value of the lost energy, in terms of both avoided fuel costs and avoided CO2 emissions. For a sector experiencing rapid capacity growth, curtailment also introduces uncertainty for renewable energy developers and investors.

At current volumes, these damages are meaningful but manageable. In the future, however, solar growth will outpace demand growth, and system flexibility improvements must keep pace. If this does not occur, solar curtailment could become routine, albeit via different mechanisms.

Although solar curtailment does not have a financial impact on generators, consumers do ultimately bear the cost. It undermines the purpose of clean energy investment by leaving assets underutilised. The system also loses out on avoided carbon dioxide emissions. Future reliance on curtailment for grid security would erode the decarbonisation benefits of accelerated renewable deployment.

3.1.1 Loss of clean units and compensation

As reported in Grid-India’s daily VRE reports, the system operator NLDC triggered emergency TRAS-down and curtailed an estimated total of 2.3 TWh of solar energy between May (when Grid-India first started publishing data) and December 2025, equivalent to ~18% of the average monthly solar generation ~13 TWh in this period. However, nearly half of this curtailment, around 0.9 TWh, was in October 2025.

As per the Detailed Procedure for Tertiary Reserve Ancillary Service, in emergency conditions, when the system operator curtails renewable energy, the renewable energy generators receive compensation at the rate of the energy charge as adopted under Section 63 of the Electricity Act, 2003. This compensation payment to the TRAS providers comes from the surplus available in the Deviation and Ancillary Service Pool Account.

Based on total units curtailed (2.3 TWh) and assuming a tariff range of INR 2.5 – 3.0 per kWh (USD 0.028 per kWh), approximately between INR 5,750 million – INR 6,900 million (~USD 63 million – USD 76 million) would have been given as compensation. While this payment is necessary to maintain the financial viability of renewable energy projects, it effectively defeats the purpose of building clean energy capacity, since the assets are not generating at full potential. Additionally, this compensation is ultimately socialised across the system and indirectly passed through to consumers via electricity tariffs.

3.1.2 Loss of avoided emissions

The curtailed solar units would have displaced the conventionally generated electricity, resulting in missed opportunities to avoid CO2 emissions. Based on emission factors for coal and solar, 2.11 million tonnes of CO2 emissions could have been avoided, roughly equivalent to annual emissions by 0.4 million households in India. This amount is small relative to India’s total power sector emissions. Yet, it underscores that unless demand forecasting errors are minimised and system flexibility expands as fast as renewable capacity additions, clean energy curtailment will become a regular alternative for grid security. This will progressively undermine the decarbonisation objective of accelerated renewable deployment.

In 2025, India witnessed a record expansion in renewable energy capacity, with solar power remaining the dominant contributor. Installed solar capacity reached approximately 135.8 GW, with around 38 GW added between January and December 2025. As a result, India achieved a major milestone by reaching 50% non-fossil fuel–based power generation capacity in 2025.

The focus is now shifting beyond capacity additions toward increasing the share of renewables in the generation mix, in order to fully realize their cost competitiveness and emissions-reduction benefits. Configurations such as renewable energy coupled with battery storage are becoming increasingly competitive with fossil-fuel-based alternatives, with tariffs in the range of INR 4.3–5.8 per kWh (~USD 0.047-0.064 per kWh), whereas plain solar tariffs remain below INR 3.0 per kWh (~USD 0.033 per kWh).

As discussed above, emergency curtailment in 2025 was caused in large part by operational issues like forecasting error. Nonetheless, solar capacity is growing far faster than demand, and so will make up a rapidly increasing share.

While under normal circumstances, the system is currently generally able to absorb solar generation, current flexibility is limited: the hydro fleet will not expand significantly over the same period, and the coal fleet has technical constraints. In both cases the system operator does not necessarily have full control over their dispatch.

As such, the kind of curtailment seen in 2025 only during specific operational circumstances could become routine if flexibility improvements are not accelerated. This curtailment may not be activated via emergency TRAS down, but it will ultimately have the same effect. In the next section, recommendations are given to improve flexibility.