A new PM-EAC paper warns that India's power grid is struggling with the rapid integration of solar energy. As solar power dominates midday supply, conventional thermal plants face extreme pressure to fluctuate output, leading to price spikes and energy wastage. The findings suggest that the challenge has shifted from building generation capacity to ensuring grid flexibility through urgent pricing and utility reforms.
The Economic Advisory Council to the Prime Minister (PM-EAC) has issued a working paper titled 'The Duck and The Camel,' which identifies a major shift in the stability of India’s power grid. The report argues that the country’s rapid transition toward solar energy, while essential, is creating significant operational strain on the national electricity infrastructure. The primary issue is the intermittent nature of solar power, which forces conventional thermal power plants to rapidly adjust their production levels to maintain grid balance.
Grid Stress Indicators and Market Impact
The report highlights that this imbalance is already visible in the Indian Energy Exchange (IEX) data. During May 2026, power prices experienced extreme volatility, moving from as low as Rs 1.11 per unit during the peak solar generation hours of the day to Rs 9.71 per unit during the night. Additionally, the system is struggling with solar curtailment, where approximately 24 GWh of potential solar energy was wasted daily in May because the grid could not absorb or store it. Reliability is also a concern, as the grid faced electricity shortages during evening non-solar peak hours on 36 separate days between April and May 2026, compared to only 6 days of shortages during solar peak hours.
Institutional and Financial Hurdles
While the report acknowledges that battery storage is often suggested as a solution, the PM-EAC identifies the root cause as institutional rather than purely technical. A major bottleneck lies in the financial health of state distribution companies (discoms). These entities often operate under severe financial pressure due to politically driven tariff structures and delays in receiving subsidy payments from state governments. Without a meaningful improvement in discom balance sheets, funding the necessary infrastructure for grid flexibility—such as advanced storage, smart metering, and demand-response systems—remains a significant challenge.
Necessary Reforms for a Renewable Grid
To move toward a more flexible system, the report advocates for comprehensive reforms. Currently, retail electricity tariffs do not reflect the actual cost of supply at different times of the day. Experts suggest moving toward dynamic pricing models that encourage consumers to shift their electricity usage to times when renewable energy is abundant. Furthermore, the report emphasizes that India’s reliance on rigid, long-term power purchase agreements needs to evolve. A more modern framework, which rewards flexibility and real-time balancing rather than just total generation capacity, is seen as essential. For long-term stability, the government may need to focus on a diverse energy mix that includes pumped hydro, flexible gas-based plants, and robust interstate transmission planning to move power efficiently from renewable-rich states to areas of high demand.