Over the last two years, government agencies auctioned 88 gigawatts of solar and renewable projects. SECI, NTPC, NHPC, and SJVN went on an unprecedented bidding spree, awarding project after project to developers eager to build India's clean energy future.
Today, 43 GW of those projects are stuck. No power purchase agreements signed. No construction happening. No revenue flowing.
And it's not just numbers on paper. Real companies are suffering. Waaree Energies, Vikram Solar, and other solar manufacturers and EPC companies who bet big on this boom are now watching their stock prices stagnate. Investors who poured money into solar EPC companies are seeing disappointing returns.
The question everyone's asking: What went wrong?
The answer lies in three critical failures that nobody addressed when projects were being auctioned. Let's break it down.
Here's the fundamental issue. Most of the 43 GW stuck projects are plain solar without battery storage systems (BESS).
These projects generate electricity between 10 AM and 3 PM when the sun is brightest. Sounds great, right? Not really.
Between 10 AM and 3 PM, most states already have excess electricity. Industrial demand is moderate. Residential consumption is low. The grid is flooded with solar power.
Many DISCOMs are actually paying neighboring states to take surplus power off their hands during these hours. Some are even curtailing solar generation, asking plants to shut down temporarily because there's nowhere for the electricity to go.
But here's what DISCOMs desperately need: Power between 6 PM and 10 PM.
That's when everyone comes home from work. ACs get switched on. TVs start running. Dinner is being cooked. Peak demand hits the grid hard.
And solar output during this time? Zero.
So DISCOMs are telling developers: "We don't want electricity between 10 AM-3 PM. If you want us to sign PPAs, attach battery storage to your projects. With BESS, you can store morning electricity and sell it during evening peak hours. Without BESS, we're not interested."
But there's a catch.
Adding battery storage increases project costs by 40-50%. A plain solar project at ₹2.40 per unit becomes ₹4.00-4.20 per unit with 4-hour battery storage.
DISCOMs won't sign PPAs at these higher rates. They say the increased cost is too much.
Developers are stuck. DISCOMs want batteries but won't pay for them. Developers can't add batteries without higher tariffs. Deadlock.
The second problem is infrastructure. Specifically, the grid connection between your home and the DISCOM.
Let's understand how electricity travels.
When a solar project in Rajasthan generates power, it needs to reach homes in, say, Madhya Pradesh. The journey happens in stages:
Stage 1: Interstate Transmission (The Highway)
Power Grid Corporation of India (PGCIL) operates massive 765 kV transmission lines connecting states. Think of these as national highways for electricity.
This part works fine. Interstate transmission has capacity. PGCIL's network spanning 495,000 circuit kilometers can handle the load.
Stage 2: Intra-State Transmission (State Roads)
Once power enters a state, state transmission utilities step down voltage and carry it to district substations using 220 kV, 132 kV, and 33 kV lines.
This part mostly works too.
Stage 3: Distribution Network (Local Streets)
This is where everything breaks down. The 11 kV distribution lines running on poles through villages and towns carry power to individual homes and businesses.
This infrastructure is ancient. Most distribution networks were designed 20-30 years ago for much lower capacity. They simply cannot absorb the additional solar power being generated.
The symptoms are visible everywhere:
To fix this, DISCOMs need:
The cost? Thousands of crores per state. The time needed? 10-15 years.
DISCOMs don't have this kind of money or time. So they're refusing to sign PPAs, saying "Our grid can't physically handle more solar power."
Even if interstate transmission works perfectly, if the last-mile distribution network is broken, electricity can't reach consumers. It's like building an expressway from Delhi to Mumbai but having potholed village roads at the destination.
The third problem is how the system was designed.
The old process looked like this:
Step 1: Developer wins auction, gets Letter of Award (LOA)
Step 2: Developer gets grid connectivity approval from CERC
Step 3: Developer starts preliminary work, land acquisition, equipment orders
Step 4: Developer approaches DISCOM for PPA
Step 5: DISCOM says "No thanks" or demands changes
Step 6: Project stuck
Notice what's missing? No PPA requirement before auction. No confirmation that DISCOMs actually want this power. No check on whether storage is included. No verification of last-mile grid capacity.
Developers were given LOAs and grid slots based on winning bids, with the assumption that DISCOMs would eventually sign PPAs. That assumption proved catastrophically wrong.
The government has finally realized the system is broken. Here's what they're now mandating:
Change 1: Storage Is Mandatory
Future projects must include battery energy storage systems. No more plain solar. If you want a PPA, your project needs BESS to provide power during evening peak hours.
The data already shows this shift. In FY26 so far, 90% of the 5.8 GW awarded includes storage. Only 10% is standalone solar.
Change 2: PPA Before Grid
The new process requires:
Step 1: DISCOM announces: "We need X GW of solar+storage power"
Step 2: Auction happens for confirmed demand
Step 3: Winner must sign PPA with DISCOM first
Step 4: Only then get grid connectivity approval
Step 5: Only then start construction
This eliminates speculation. Projects only get built if DISCOMs actually want them.
Change 3: Grid Slot Auctions
CERC is proposing to auction the 31.8 GW of blocked grid connectivity to new bidders who have firm PPA commitments. No more holding slots for projects that may never get built.
Change 4: 12-Month Cancellation Rule
LOAs that remain unexecuted beyond 12 months can now be cancelled. This gives agencies legal cover to terminate stuck projects.
Now you understand why Waaree Energies, Vikram Solar, and other solar EPC companies are underperforming.
The government was the majority buyer for the last 2-3 years through SECI, NTPC, NHPC, and SJVN. These agencies awarded 88 GW of projects.
Solar manufacturers ramped up capacity anticipating massive demand. They invested in new production lines. They ordered raw materials. They hired workers.
Then 43 GW got stuck.
Orders that were supposed to come? Delayed or cancelled. Revenue that was projected? Not materializing. Projects that should be under construction? Frozen.
Waaree, Vikram, and others are Solar EPC caught in the crossfire. They built capacity for a boom that hasn't materialized. Their order books are thinner than expected. Investors are disappointed.
This is why solar stocks aren't giving good returns despite India's ambitious renewable targets. The targets exist. The auctions happened. But actual execution is stuck.
The good news: This is a temporary phenomenon.
The government has identified the problems and is implementing fixes:
The bad news: The transition will be painful.
But by 2026-2027, the market should stabilize. New auctions with storage will resume. DISCOMs will start signing PPAs for round-the-clock power. Grid upgrades (though slow) will progress.
Short term (next 12-18 months): Solar EPC companies and manufacturers will continue to struggle. Stock performance will remain muted.
Medium term (2-3 years): Companies that pivot to storage-integrated solutions will win. Those stuck with plain solar capability will lose.
Winners:
Losers:
India auctioned 88 GW of solar projects over two years. 43 GW is stuck because:
Problem 1: Plain solar without batteries generates power when DISCOMs don't need it (10 AM-3 PM) and gives zero when they desperately need it (6 PM-10 PM)
Problem 2: Interstate transmission works fine, but last-mile distribution grids are broken and can't absorb more solar
Problem 3: Old system allowed projects without confirmed buyers. No PPA requirement before grid allocation. No storage mandate.
The fix: Mandatory BESS. PPA-first approach. Grid slot auctions. Cleanup of stuck projects.
Impact on stocks: Solar manufacturers like Waaree and Vikram are suffering because their biggest customer (government agencies) has 43 GW stuck. This is temporary, but the transition will be painful.
The Indian solar story isn't over. It's just entering a more mature, realistic phase where storage is mandatory, grids must be upgraded, and speculative auctions without buyers are no longer tolerated.
For investors, the message is clear: The solar boom isn't cancelled. It's being recalibrated. Winners will be those who adapt to the new reality of storage-integrated projects. Losers will be those still stuck in the old plain-solar model.
Sources: Ministry of New and Renewable Energy | CERC | ICRA Report | Industry Data
