To keep the grid at 50 Hz, every energy generator and large consumer must submit schedules in advance — declaring how much power they will inject or draw in each time block of the day.When reality diverges from those schedules, frequency drifts. These gaps — between what was committed and what actually happened — are called deviations. In a tightly balanced grid, they are not just an accounting problem. They are a physical one.DSM: making deviation expensiveTo keep deviations in check, grid operators use a penalty mechanism called the Deviation Settlement Mechanism, or DSM. It works on one principle:If your deviation makes the grid’s problem worse, you pay more.If it inadvertently helps, your penalty is reduced.The direction of frequency at the moment of deviation is what determines the penalty. Whether you are a generator or a consumer, the question grid operators ask is the same: did your deviation push the grid further from balance, or closer to it?<img src="/media/insights/1784630202683-395df8f8.jpg">How are schedules generated?Accurate scheduling begins with accurate forecasting — and the difficulty of that forecasting varies enormously depending on the type of entity.<ul><li>For a thermal power plant, scheduling is straightforward — fuel supply is controllable and output is predictable from available capacity.</li><li>For a solar or wind farm, the fuel is the weather. Output depends on solar irradiation, wind speed, humidity, and cloud cover — variables that shift every minute.</li></ul><img src="/media/insights/1784630272163-bde69516.jpg">Forecasting is not limited to generators. Large consumers and DISCOMs must also forecast their demand using historical consumption patterns, operational plans, weather conditions, and other external factors. Inaccurate demand forecasts can lead to deviations in drawal schedules, attracting DSM implications in much the same way that inaccurate generation forecasts affect generators.Even the best forecasting models carry uncertainty, and that uncertainty translates directly into deviation, and deviation into penalties.Enter the QCATo manage this forecasting challenge, renewable energy generators appoint a Qualified Coordinating Agency — a QCA. The QCA takes on the work of forecasting generation, preparing schedules, and submitting them to the grid operator on the generator’s behalf.<a href="https://reconnectenergy.com/" rel="noopener noreferrer" target="_blank">Firms like ours</a> act as QCAs, combining weather data, machine learning models, and grid expertise to produce the most accurate possible forecasts — minimising the deviation gap and, with it, the DSM penalties their clients face.<blockquote>Up next: How a QCA aggregates DSM across multiple generators — and why pooling deviations can significantly reduce the penalty burden for each individual plant.</blockquote>

<h3>The Moment</h3>It is 1 May 2026. Shortly after noon, the trading floor of the Indian Energy Exchange (IEX) does something it has never done before.The price of electricity on the Real-Time Market that trades power to be delivered within the hour - hits ZERO. Not near zero. Not technically-close-to-zero. Exactly zero rupees per unit. <img src="/media/insights/1784627403280-7d323fb5.jpg">Figure 1: On 1 May 2026, the IEX Real-Time Market did something it had never done before: cleared at exactly zero. The price spike by evening told the rest of the story. Source: <a href="https://www.iexindia.com/market-data/real-time-market/market-snapshot?interval=ONE_FOURTH_HOUR&amp;dp=SELECT_RANGE&amp;showGraph=false&amp;toDate=01-05-2026&amp;fromDate=01-05-2026" rel="noopener noreferrer" target="_blank" style="font-size: 13px;">Indian Energy Exchange (IEX)</a>The grid was aflush with solar power. Demand had not caught up. And there was nowhere to put the surplus.The real-time market of the Indian Energy Exchange hit zero for the first time on 1 May 2025. Prices <a href="https://www.iexindia.com/market-data/real-time-market/market-snapshot?interval=ONE_FOURTH_HOUR&amp;dp=SELECT_RANGE&amp;showGraph=false&amp;toDate=15-05-2026&amp;fromDate=15-05-2026" rel="noopener noreferrer" target="_blank">touched zero again on 15 May.</a> While such sharp drops were once uncommon, their frequency has been rising in recent months — and even when not at zero, prices have fallen below ₹1 per unit on several occasions, largely during peak solar hours.In the weeks that followed, the pattern repeated. What looked like a one-day anomaly is a structural signal. And it is getting louder.<h3>Why Is This Happening?</h3>India’s installed solar capacity<a href="https://mnre.gov.in/en/physical-progress/" rel="noopener noreferrer" target="_blank"> has reached 154 GW</a> - part of a total renewable base now exceeding 275 GW. Every year, the country adds tens of gigawatts of new solar to the grid. It is one of the most ambitious clean energy build-outs in history.But solar is not dispatchable. It arrives when the sun decides, not when customers need it. Peak solar generation hits between 11 AM and 2 PM. Peak electricity demand arrives between 7 PM and 10 PM. That is a five-to-seven hour gap — and crossing it requires storage.<img src="/media/insights/1784627556753-c4c1ee64.jpg"><img src="/media/insights/1784627589190-04ddfa80.webp">Renewable energy projects are classified as “must-run” — their output cannot be curtailed except for grid security or safety reasons. So when surplus floods in and demand does not absorb it, the price does not just fall. It collapses.The result: on a sunny afternoon, power prices crash toward zero. By evening, when industrial demand peaks and solar has vanished, the same unit of power can fetch ₹5 to ₹10. On peak days, that spread has exceeded ₹9 per unit - every single sunny day. Weaker demand - driven by milder weather or reduced industrial consumption can further widen this mismatch, pushing exchange prices sharply lower.<h3>What Zero Prices Actually Cost</h3>When the price hits zero, generators earn nothing for the electricity they supply. That is the simple version. The real cost runs deeper.Clean energy is wasted. Surplus renewable power that cannot be stored or consumed is curtailed i.e. switched off. Between May and December 2025, India discarded approximately<a href="https://www.nldc.in/system-operation-reports/" rel="noopener noreferrer" target="_blank"> 2.3 terawatt-hours of solar electricity</a>. At a conservative ₹3 per unit, that is roughly ₹690 crore of clean generation written off in just seven months.DISCOMs sell below cost. Distribution companies, already financially stressed, are forced to sell excess electricity on exchanges at rates far below their procurement cost, thus effectively worsening balance sheets that are already under pressure. DISCOMs are often selling surplus electricity on exchanges at rates far below procurement cost, worsening the financial stress of already loss-making utilities.Developers get paid not to generate. When grid operators issue curtailment instructions for grid security, CERC regulations require that generators receive TRAS (Tertiary Reserve Ancillary Service) compensation — effectively paying for electricity that was never produced.The problem compounds annually. Every new gigawatt of solar added without matching storage deepens the mismatch. By 2030, in a scenario where storage build-out remains slow, India could be writing off nearly ₹2,000 crore of clean energy every year.<img src="/media/insights/1784627719079-d11b91d7.jpg">Table 1: Illustrative estimates at ₹3/unit average market price (IEX DAM, FY2024–25). Storage requirement targets from <a href="https://cea.nic.in/wp-content/uploads/irp/2023/05/NEP_2022_32_FINAL_GAZETTE-1.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 13px;">CEA National Electricity Plan 2022-23</a>.<h3>The Signal in the Price Gap</h3>That ₹9-per-unit spread between noon and evening; every sunny day is not a curiosity for power market analysts. It is a flashing economic signal.Whoever can store cheap solar power at noon and release it at 8 PM earns the difference. That is exactly what grid-scale batteries do. The economics of storage already exist. The infrastructure does not.CERC’s evolving regulations are making it possible for storage projects to participate in both the energy market and ancillary services simultaneously - unlocking the revenue streams that make battery projects commercially viable. The cost of building a grid battery in India has fallen from around ₹10 per unit stored three years ago to approximately ₹2.8 today and also hitting zero as shown in Figure 1 earlier. The technology got dramatically cheaper while policy was still catching up.The price gap between peak solar hours and evening peak demand is the market’s way of saying: put a battery here. The signal is clear. The response, so far, has been slow.<h3>What the Fix Actually Looks Like</h3>India’s central electricity planners have already done the math. To run reliably on predominantly renewable power by 2032, the country needs approximately <a href="https://cea.nic.in/wp-content/uploads/irp/2023/05/NEP_2022_32_FINAL_GAZETTE-1.pdf" rel="noopener noreferrer" target="_blank">47 GW of battery storage and 27 GW of pumped hydro.</a> Today, it has roughly 0.2 GW of operating battery storage.<img src="/media/insights/1784627796010-cc8949a3.jpg">Figure 3: India's storage build-out: where we are, where realistic deployment lands by 2027, and where the grid needs to be by 2032. Source: <a href="https://cea.nic.in/wp-content/uploads/irp/2023/05/NEP_2022_32_FINAL_GAZETTE-1.pdf" rel="noopener noreferrer" target="_blank" style="font-size: 13px;">CEA National Electricity Plan 2022-23</a>.The gap is not a mystery. It is a set of specific, solvable problems.Let storage earn properly. Battery projects currently have to choose between selling power or providing grid-balancing services - rarely both at once. Unlocking all revenue streams simultaneously changes the investment case fundamentally.Execute the contracts. As of late 2025, RE projects worth around 44 GW were still waiting for the formal agreements needed to move from auction to construction. Every month of delay is a month of storage that does not get built.Treat storage as infrastructure. We do not treat transmission lines as optional add-ons to the power system, and storage should be no different. It is equally essential to a functioning renewable grid - it deserves the same commitment: planned at scale, integrated from the start, not bolted on as an afterthought.<h3>The Second Chapter — And What Comes After It</h3>For a decade, India’s energy story was about how many gigawatts of solar it could install. That chapter is written, and it is a good one.The next chapter is about timing. Making the power that is generated actually available when people need it. The solar surge at noon must translate into lit homes at 7 PM - not into a control-room order to switch off.But here is where the story gets more layered. The storage problem India faces is not just about bridging a five-hour gap. As renewable penetration deepens toward 50%, 60%, and beyond, the gaps get longer. There will be cloudy weeks. There will be low-wind winters. There will be seasonal mismatches that no lithium ion battery, designed to store at most four hours of power, can solve on its own.This is the problem that policymakers are now beginning to confront in earnest.<h3>Enter Long-Duration Storage</h3>According to a recent article, the government is preparing a financial support scheme for Long-Duration Energy Storage (LDES) technologies - part of what is being called the<a href="https://wri-india.org/sites/default/files/2026-01/India%E2%80%99s%20battery%20ecosystem.pdf" rel="noopener noreferrer" target="_blank"> India Battery Storage Vision 2047,</a> being developed jointly by the ministries of power and heavy industries, and expected to be rolled out by FY2028.LDES technologies i.e. pumped hydro, flow batteries, compressed air energy storage (CAES), and sensible heat storage are designed to store power not for four hours but for eight, twelve, or more. They are the difference between a grid that can manage a cloudy afternoon and a grid that can manage a cloudy week.India has added <a href="https://mnre.gov.in/en/physical-progress/" rel="noopener noreferrer" target="_blank">178 GW of renewable capacity</a> in just five years, taking clean energy’s share of installed power capacity to 51.5%. Another 100 GW is expected to be added by 2030. Its storage infrastructure has not come close to keeping pace. It currently stands at only 2% of what is needed. The grid’s ability to absorb and dispatch green power efficiently; — particularly during non-solar, low-wind hours — is being tested in real time, every single day.<h3>Why LDES Has Taken This Long</h3>The honest answer is cost and commercial maturity. Lithium-ion batteries, despite falling rapidly in price, remain the default because they are proven, financeable, and understood by lenders. LDES technologies carry higher upfront costs and lower technological maturity by comparison, which is precisely why the private sector has not moved without a policy signal.India currently operates two tranches of<a href="https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2236994&amp;reg=3&amp;lang=2" rel="noopener noreferrer" target="_blank"> VGF support for BESS totalling 43.8 GWh</a>, complemented by interstate transmission system (ISTS) charge waivers for pumped storage and renewable-linked battery storage projects until June 2028. A dedicated financial support framework for Long-Duration Energy Storage; including VGF and interest subvention mechanisms — is under active development by the Ministry of Power. The LDES scheme being planned is the next, more ambitious layer on top of this foundation.<h3>The Closing Signal</h3>When prices on the IEX hit zero on 1 May 2025, the immediate story was about excess solar. But the deeper story was about what happens to a grid that keeps adding generation without adding the architecture to manage it. Zero prices are a short-duration symptom. LDES is the long-duration answer.India’s push mirrors what is happening globally. According to a recent whitepaper by policy advocacy group Long Duration Energy Storage Council, governments in the UK, Germany, California, New York, and New South Wales are all at various stages of assessing and implementing LDES services. The race is real. The economics are moving. The policy window — both in India and internationally — is open, but it will not stay open indefinitely.The panels are ready. The sun shows up every day. The storage conversation has finally graduated from batteries-as-backup to storage-as-infrastructure.

When the Sun Shows Up and the Grid Panics

When the Sun Shows Up and the Grid Panics

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