Crisil flags curtailment risk for 35 GW renewable capacity

Over 35 GW of renewable energy capacity in India faces a high risk of grid curtailment in the upcoming fiscal year, according to an analysis by Crisil Ratings. The issue stems from a mismatch between rapid additions in solar and wind capacity and slower progress in interstate transmission system (ISTS) development.

Access risk
The report highlights the difference between Long-Term General Network Access (LT GNA) and Temporary General Network Access (TGNA). Projects with LT GNA have assured transmission access and priority scheduling, while those under TGNA are exposed to curtailment during congestion.

Between November 2025 and February 2026, TGNA-based projects saw nearly 39% curtailment. In Rajasthan and Gujarat, which account for about 45% of installed renewable capacity, curtailment reached around 50% for 13–14 GW operating under TGNA.

With about 20 GW of new ISTS-connected capacity expected in FY27, much of it is likely to begin under TGNA, raising total capacity at risk to an estimated 35–37 GW.

Financial impact
Curtailment is expected to affect project returns and debt metrics. Crisil estimates that a 50% curtailment over 12 months could reduce equity internal rate of return (IRR) by up to 150 basis points and lower debt service coverage ratio (DSCR) by up to 10 basis points.

While the DSCR impact appears limited, it can reduce financial flexibility for projects in early operational stages and increase lender sensitivity to performance risks.

Near-term buffers
Crisil does not anticipate immediate sector-wide credit stress. Many affected projects are recently commissioned and operate under loan moratoriums or back-ended repayment schedules, limiting near-term repayment pressure.

Developers are expected to provide interim support, given that returns remain viable and TGNA is likely to convert to LT GNA within 10–12 months as transmission capacity improves. In addition, debt service reserve accounts (DSRAs) provide short-term liquidity buffers.

Outlook
Addressing curtailment risk will depend on both transmission expansion and operational measures. Policy approaches such as time-based grid access allocation may improve utilisation of existing infrastructure. Over the longer term, deployment of battery energy storage systems (BESS) is expected to play a key role in managing surplus generation and stabilising grid operations.

The featured photograph is for representation only.