The Constraint Has Moved: For two decades, Indian power was an infrastructure story: build capacity, close the deficit. That trade is done. A new EAC-PM working paper by Sanjeev Sanyal and Satvik Dev, using 15-minute SCADA data from Grid-India, argues the binding constraint has shifted from how much the grid can generate to when — and how fast it can change what it generates.
A capacity-constrained grid rewards whoever owns megawatts. A flexibility-constrained grid rewards whoever can move a megawatt-hour across time — storage operators, ramping-capable assets, and the supply chain feeding them. Solar developers are increasingly selling into the hour when their output is worth least.
The paradox in one day: On 21 May 2026 India set an all-time peak of 270.8 GW at 3:45 PM. The price at that moment was ~₹3/kWh. By 6:30 PM it hit the ₹10 ceiling — with demand lower. Peak demand and peak price no longer coincide.
Must Read: Is Your Financial Plan Still on Track?
The Hard Data
Solar is now 29% of installed capacity (157 GW as of May 2026), up from 2% in 2015-16, and enjoys must-run status. The result is a summer “duck” and a winter “Bactrian camel” in net load (demand minus solar). Both are steepening violently.
*Midday trough refers to the sharp drop in net load (total electricity demand minus solar power output) that occurs during the middle of the day, typically between 10:00 AM and 2:00 PM
Read the last two rows together. Night-time load grew ~40 GW in three years. The midday trough did not move. Every incremental unit of midday demand has been absorbed by solar, leaving the conventional fleet with no more to do at noon than in 2023. The entire burden of demand growth has landed in the non-solar hours.
The price signal confirms it. The May average intraday spread on IEX has widened from ₹5.27/kWh (2023) to ₹8.60/kWh (2026) — a peak-to-trough ratio of 8.8×, and that is suppressed by CERC’s ₹10 ceiling.
Two corroborating signals: curtailment rose from 677 MU (April 2026) to 747 MU (May) — 24 GWh discarded per day, over a quarter of Delhi’s daily consumption. And the grid fell short at the non-solar peak on 36 of 61 days across April–May, versus 6 of 61 in solar hours; worst instance, 5,405 MW short at 10:34 PM on 24 April.
Winter presents an even harsher test for grid stability. The January evening ramp—the rapid surge in conventional power (coal and hydro) required as the sun sets and solar generation vanishes—more than doubled in three years, jumping from 27 GW in 2023 to 64.7 GW in 2026. Compounding this stress is a historic structural inversion: the midday net-demand trough (143 GW) now sits below the pre-dawn floor (151 GW). Historically, thermal plants experienced their lowest load during late-night hours (3:00 AM to 4:00 AM). Today, heavy midday solar flooding forces coal units to throttle down to deeper operating minimums at broad noon than in the dead of night.The Inside Story: Who Captures the Arbitrage
Value is migrating from energy to time-shifting. Three bottlenecks determine who captures it.
The coal fleet cannot flex. To make room for the surge of daytime solar energy flooding the grid, the Central Electricity Authority (CEA) issued regulations in 2023 requiring coal plants to upgrade their machinery so they can drop down to a 40% technical minimum load (TML).
- The Goal (40% TML): Allow coal plants to back down significantly during midday solar hours, stepping out of the way so cheap solar power can be consumed.
- The Reality (55% TML): Most coal plants in India currently achieve only a 55% technical minimum. Older plant designs, aging boilers, and technical limitations prevent them from ramping down any lower
Coal plants get costlier the deeper they back down, and violent cycling accelerates wear — a margin drag that will show up in O&M lines, and a scarcity premium for whoever can ramp.
Hydro is doing the work and is nearly tapped out. On 21 May, hydro ramped from ~19 GW to ~29 GW between 5 PM and 8 PM. Fast, cheap, dispatchable — but geographically fixed, monsoon-dependent, and burdened with decade-long gestation. It cannot scale with the ramp.
The storage gap is a battery gap. Halving one May evening ramp requires ~130 GWh of discharge over the 1–8 PM window. India’s entire pumped-storage plus battery fleet discharged an average of 23.8 GWh/day in May 2026. Against the National Electricity Plan’s 8.68 GW BESS target for 2026-27, only 0.27 GW was operational in January 2026, since scaled to ~2.7 GW. Pumped hydro has all but hit its mark (7.2 GW of 7.45 GW).
The law is catching up. The draft Electricity (Amendment) Bill, 2025 finally recognises storage as part of the grid and lets regulators build a market for it.
The draft Rights of Consumers Amendment Rules, 2026 push consumers to shift load out of the evening peak, with time-of-day tariffs due by April 2027 for large commercial and industrial users and April 2028 for the rest. In simple terms, the government is setting firm deadlines to roll out Time-of-Day (ToD) electricity tariffs, which charge consumers different rates depending on when they consume power. The goal is to encourage businesses and households to shift their heavy electricity usage away from the expensive evening peak and into the cheap midday solar hours.
What to Watch Out For
- Watch the BESS order book: The 0.27 GW → 2.7 GW move against an 8.68 GW target is the sector’s most investable delta. Imported cell dependence and ACC-PLI execution are the chokepoints; long-term profit margins sit with system integrators and EPC contractors with bankable balance sheets, not simple solar module assemblers
- Smart Meters: Variable electricity tariffs (charging higher rates during evening peak hours) are slated for April 2027 for C&I users and April 2028 for the rest. This is contingent on smart-meter rollout completing by April 2028. Metering slippage slips the entire demand-response monetisation thesis; Closely track smart meter rollout contracts and execution progress.
Coal Power Isn’t Dead Yet: Severe power shortages during non-solar hours keep peak market prices high, boosting revenues for flexible thermal plants.
Sources
Sanyal, S. and Dev, S. (2026). The Duck and The Camel: Tracing the Net Load on the Indian Power Grid. EAC-PM Working Paper Series, EAC-PM/WP/53/2026, Economic Advisory Council to the Prime Minister, Government of India, July 2026.
Primary underlying data: Grid Controller of India (GRID-INDIA), National Load Despatch Centre — Daily Power Supply Position Reports and 15-minute SCADA data; GRID-INDIA REMC/VRE Reports; Indian Energy Exchange — Day Ahead Market Snapshot; Central Electricity Authority — National Electricity Plan (Vol. I: Generation), 2022–2027 and Long-Term National Resource Adequacy Plan (2026-27 to 2035-36); India Climate and Energy Dashboard, NITI Aayog; Ministry of New and Renewable Energy — Physical Progress; India Meteorological Department — Monthly Climate Summaries; Draft Electricity (Amendment) Bill, 2025; Draft Electricity (Rights of Consumers) Amendment Rules, 2026; California ISO.
This note is for information purposes only and does not constitute investment advice or a recommendation to buy or sell any security.