The Seamless Link
The substantial curtailment of renewable energy observed in India during the latter half of last year is not merely a technical anomaly but a symptom of deeper systemic inflexibilities within the power sector. These challenges extend beyond the operational limits of coal-fired power plants, pointing to critical commercial and regulatory hurdles that impede India's progress towards its ambitious clean energy objectives and investor confidence.
The Core Catalyst
India's national grid operator, GRID-India, reported curtailments totaling up to 23 gigawatts (GW) of renewable energy between May and November 2025, with approximately 2.3 terawatt-hours (TWh) lost between May and December. This represents roughly 18% of average monthly solar generation and incurred compensation costs of approximately $63 million to $76 million to affected generators. The primary driver was the inability of a significant portion of India's coal-based thermal fleet to operate below its Minimum Technical Load (MTL) of 55%. As renewable energy generation, particularly solar, surged during daylight hours, the grid struggled to balance supply and demand. This situation was exacerbated by lower-than-forecasted electricity demand, driven by mild weather, and the steep evening ramp-up requirements nearing 60 GW, creating a "duck curve" phenomenon. GRID-India also flagged grid security risks, noting instances where system frequency remained outside permissible bands due to surplus supply during peak solar hours. The lost renewable energy could have avoided an estimated 2.1 million tonnes of CO2 emissions.
The Analytical Deep Dive
International Grid Integration Strategies
Globally, countries are adopting diverse strategies to manage high renewable penetration. Germany and the United States, for instance, have focused on integrated planning, expanding transmission networks, deploying sophisticated demand-side management, and significantly investing in energy storage solutions like battery energy storage systems (BESS). Denmark and Portugal have demonstrated the feasibility of high renewable integration through robust grid management and dispatchable renewable sources. These approaches emphasize flexibility and systemic adaptation over solely relying on traditional baseload generation.
Sectoral Shifts and Investment Needs
India's power sector is undergoing a profound transition, with non-fossil fuel sources now constituting approximately 50% of installed capacity. However, the actual generation share of renewables remains lower, around 23% to 40%, highlighting a gap between capacity and dispatch. In 2025 alone, India added a record 38 GW of solar capacity. This rapid growth is occurring alongside planned additions of new coal-fired capacity, potentially creating an excess that may lead to unprecedentedly low coal plant utilization rates and financial stress for generators. Analysts estimate that the energy transition will require an investment of $1.5 trillion between 2026 and 2035, with grid modernization and storage being critical components, estimated at $145 billion annually. Transmission bottlenecks are a significant impediment, with a reported 42% gap between planned and commissioned transmission lines, leaving renewable capacity stranded. India's current energy storage capacity (4.7 GW pumped hydro, 219 MWh BESS as of March 2024) falls far short of its 2030 targets.
Historical Context of Curtailment
The recurring issue of renewable energy curtailment has escalated as India's renewable capacity has expanded. While specific annual figures vary, reports indicate a consistent trend of increasing curtailment events driven by grid integration challenges, underscoring that flexibility improvements must keep pace with renewable capacity growth.
THE FORENSIC BEAR CASE
Structural and Commercial Barriers
The core issue is not solely the technical minimum load of coal plants, but the ingrained commercial and regulatory frameworks that fail to incentivize necessary thermal flexibility. GRID-India and analysts point to structural issues beyond mere technical limitations. Despite the Central Electricity Authority (CEA) having a roadmap to enable coal-fired plants to operate at 40% MTL by 2030, progress faces significant resistance. NTPC, a major power producer, has raised concerns that operating at 40% MTL could reduce plant lifespan by up to a third and increase maintenance costs, leading them to maintain a 55% minimum. This pushback suggests that incentives beyond mere compensation for reduced efficiency are required for widespread adoption. Commercial inflexibility, such as long-term power purchase agreements for coal, continues to bind utilities to higher-cost thermal generation even when cheaper renewables are available, creating "avoidable curtailment". Furthermore, the financial health of distribution companies (DISCOMs) remains a persistent concern, potentially hindering their ability to invest in or contract for grid flexibility solutions. The significant gap between planned and commissioned transmission infrastructure also means that even if generation capacity exists, it cannot always be evacuated, leading to curtailment.
Underlying Risks
This systemic inflexibility poses a substantial risk to India's target of achieving 500 GW of non-fossil fuel capacity by 2030. If not addressed, it could lead to prolonged periods of energy instability, undermine investor confidence in the renewable sector due to unpredictable dispatch, and potentially increase overall energy costs for consumers as underutilized, higher-cost coal capacity is maintained for reliability. The continued reliance on and planned expansion of coal capacity, despite falling costs of renewables and storage, suggests a potential for stranded assets and inefficient capital allocation.
The Future Outlook
The CEA has outlined a phased roadmap to enable coal-fired power plants to operate at 40% MTL by 2030, alongside measures like two-shift operations and deployment of battery and pumped storage systems. However, the pace of regulatory alignment and adoption of these measures remains a critical concern. Analysts emphasize that India's energy transition is increasingly constrained by flexibility rather than generation capacity. The successful integration of high renewable penetration will necessitate not only technical upgrades but also fundamental structural reforms in market design, commercial contracts, and regulatory frameworks, alongside substantial investment in transmission and energy storage infrastructure. The pathway forward requires coordinated planning and incentives to unlock the full potential of India's clean energy ambitions.