Is standalone solar losing its edge in India?

However, the procurement model underpinning India’s solar boom is beginning to show signs of strain. Speaking to PV Tech Premium, Shubham Kumar Prajapati, general manager at Indian software engineering and consulting firm 1E9 Advisors, said the sector’s core challenge is becoming increasingly clear: standalone solar generates power when the sun shines — not necessarily when the grid needs it most.  

As India’s evening peak demand intensifies and renewable penetration deepens, the industry is shifting from a “cheapest megawatt” mindset toward a “most usable megawatt” approach. In that transition, battery energy storage systems (BESS) are rapidly moving from optional add-ons to central infrastructure. 

The end of pure-play solar? 

For years, India’s utility-scale procurement model prioritised getting the lowest possible solar tariff. While the strategy succeeded in driving prices to globally competitive levels, it overlooked a fundamental challenge — intermittency.  

Solar generation follows a predictable daytime curve, while India’s electricity demand ramps sharply in the evening — precisely when solar output declines. The result is an increasing mismatch between generation and consumption patterns. 

This is where storage enters the equation. 

In February 2025, India’s Central Electricity Authority, under the Ministry of Power, issued an advisory mandating all new solar tenders to include a minimum two-hour storage component equivalent to at least 10% of project capacity. The move effectively formalised a shift toward prioritising dispatchable renewable deployment. 

Since then, tender structures have evolved rapidly. New procurement mechanisms including firm and dispatchable renewable energy (FDRE), round-the-clock (RTC) and peak-power supply tenders are increasingly centred on hybrid renewable-plus-storage configurations. 

“There’s an inherent mismatch between the hourly generation profile of solar and India’s typical demand curve. So even though solar is the cheapest source of generating electrons, it does not meet the criterion of being available when power is needed, making it inherently non-dispatchable.

“That’s where storage comes in to make it dispatchable, like how a thermal plant operates. The advantage, however, is that the combined cost of solar and storage is still lower than that of a new thermal plant,” Prajapati explains. 

Solar is no longer evaluated purely as a standalone generation asset, but as part of a larger system capable of delivering electricity on demand. 

Storage economics are changing the equation 

The economics underpinning this transition are becoming increasingly compelling. Historically, standalone solar thrived because falling module costs enabled ultra-low tariffs. But the rapid buildout of daytime solar capacity has begun to erode merchant market revenues during peak solar production hours. 

“Looking at it from a pure merchant perspective, if you are operating a solar plant only through the market, which is run by Indian Energy Exchange (IEX), the recent price profile shows that the solar capture rate has fallen from almost INR5/kWh in FY23 to INR2.23/kWh in FY26. This is primarily because when solar generation is at its peak, prices are near zero. In contrast, for storage, the spread between the lowest-priced hours and the highest-priced hours has been widening as solar penetration increases and daytime prices fall,” he emphasises. 

Recent tenders floated by Solar Energy Corporation of India (SECI) demonstrate how procurement structures are adapting. One of the most notable developments is the emergence of contracts-for-difference (CfD)-style tenders that allow developers to source up to 25% of required power from merchant markets instead of solely relying on co-located generation assets. 

The result is a more sophisticated optimisation challenge: developers must now balance component sizing, storage duration and forward power market expectations rather than simply minimising upfront capex. 

The challenge of scaling solar-plus-storage 

Despite policy support and growing project pipelines, India’s solar-plus-storage sector continues to face structural and commercial constraints that could slow near-term deployment. 

A key bottleneck remains the still-evolving domestic battery supply chain, which leaves developers heavily dependent on imported cells, predominantly from China. This exposes projects to currency volatility, tariff risk and broader geopolitical uncertainty. At the same time, BESS introduce a layer of technical complexity that many developers and lenders are still adapting to. 

Unlike solar assets, which typically operate for 20–25 years with relatively predictable performance, lithium-ion systems are subject to usage-driven degradation and may require augmentation or replacement within a decade. 

“BESS is also a new technology. It’s not a generation asset. It’s not a load asset. It requires daily operations depending on the use case. Plus, technological degradation depends on the usage of the battery,” Prajapati explains. 

This uncertainty is compounded by limited visibility on long-term cost trajectories. As Prajapati notes, “No one really knows what the technology or cost landscape will look like after 10 years.” 

Beyond technology risk, physical and market constraints also persist. Land availability and transmission bottlenecks continue to restrict large-scale deployment, while India’s power market remains heavily anchored in long-term contracted revenues, limiting exposure to merchant opportunities that typically support storage arbitrage. 

Yet despite these structural challenges, early signals point to growing momentum. Recent milestones — including Adani’s commissioning of a 3.37GWh battery storage project, reportedly the largest single-site installation of its kind outside China — underscore the scale and ambition now entering India’s storage market. 

Can hybrid tenders solve India’s execution problem? 

India’s renewable sector has long struggled with a sizeable gap between awarded and commissioned capacity. Delayed PPAs, land acquisition bottlenecks, transmission shortages and shifting tariff expectations have left roughly 45GW of awarded renewable capacity stalled or delayed. 

Ironically, ultra-competitive pricing may itself have contributed to the problem. Falling tariffs encouraged DISCOMs to delay procurement in anticipation of even lower prices in subsequent auctions. 

Hybridisation could help change that dynamic. 

According to Prajapati, policymakers are now exploring relief mechanisms that would allow stalled standalone renewable projects to integrate storage, secure commissioning deadline extensions or exit projects cleanly if required. 

At the same time, SECI is redesigning procurement around actual buyer demand. 

Rather than floating generic tenders and searching for buyers later, recent procurement models involve aggregating demand from DISCOMs and commercial and industrial (C&I) customers first, then structuring projects around specific supply requirements. 

This approach could significantly reduce stranded asset risk while improving visibility for developers and financiers. 

Dispatchability: The new benchmark 

The broader implication is clear: India is redesigning its renewable architecture around dispatchability. 

That does not necessarily mean standalone solar disappears. Existing fixed-rate PPAs continue to shield many operating projects from merchant market volatility, and solar will remain the cheapest source of electricity generation in India. 

But the role of standalone solar is changing. 

Increasingly, solar alone may no longer satisfy what utilities actually want to procure: firm, schedulable and flexible power. 

Prajapati compares the transition to conventional generation assets. 

“A hydro plant is evaluated together with its reservoir, and a thermal plant with its coal storage,” he says. “For solar and wind, the raw material is sunlight and wind, which you cannot control. Storage becomes the enabler that makes these assets dispatchable.” 

That framing may ultimately define India’s next energy transition phase. 

The first chapter of India’s solar boom was about proving renewables could be cheap. The next chapter will determine whether they can reliably power one of the world’s fastest-growing electricity systems. 

And in that future, standalone solar may no longer be enough.