Beyond the Grid: Falling Solar Prices Call for Storage Systems

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Beyond the Grid: Falling Solar Prices Call for Storage Systems

On the morning of May 25, between 9:30 and 9:45 am, solar power prices on the Indian Energy Exchange (IEX) dropped to zero. Buyers during this brief window paid only for transmission and access charges—no cost for the electricity itself.

While the zero-price event lasted only minutes, it signaled a larger shift in India’s energy landscape. Just a decade ago, experts were forecasting solar prices might eventually reach grid parity. Today, the drop is more than symbolic—it’s reshaping market dynamics.

A Broader Trend

The May 25 event wasn’t isolated. Throughout the month, renewable energy prices stayed low, with near-zero rates recorded repeatedly between 9:15 am and 2:30 pm. This was partly due to unseasonal rains and an early monsoon, which led to a 4% drop in electricity demand compared to the previous year.

On the supply side, increased hydro, wind, and thermal generation created surplus liquidity on the exchange. As a result, both the Day-Ahead Market (DAM) and Real-Time Market (RTM) saw reduced prices.

The RTM’s average clearing price in May 2025 was ₹3.43 per unit—a 28% drop year-on-year,” said Rohit Bajaj, Joint Managing Director at IEX. “This enabled discoms and industrial consumers to replace costlier power with more affordable exchange-traded electricity.” Bajaj also noted that RTM volumes hit a record 4,770 million kWh in May, up 42% from last year.

Making the Case for Storage

As solar prices fall and battery costs decline, energy experts are calling for accelerated investment in storage solutions.

This is a clear call for storage,” said Dr. Rashi Gupta, Managing Director at Vision Mechatronics and member of the UN Council of Engineers for Energy Transition. In a recent LinkedIn post, she emphasized that zero-tariff periods during peak solar hours point to the need for battery energy storage systems (BESS), which can stabilize the grid, increase flexibility, and generate new revenue streams.

Ashwin Gambhir of the Prayas Energy Group agrees. “With more solar entering the grid, we’re heading toward structurally lower daytime prices,” he said. “This is the right moment to redesign time-of-day tariffs and integrate more storage to strengthen the power system.

Unlocking Market Potential

Currently, only around 7% of India’s electricity is traded on exchanges—the majority flows through long-term contracts. But that small portion plays a crucial balancing role.

There’s massive untapped potential in making consumers more active participants in the power market,” said Disha Agarwal, Senior Programme Lead at the Council for Energy, Environment and Water (CEEW). A recent CEEW analysis found that shifting 24 GW of demand from evening to daytime in just 10 states could allow India to absorb 40 billion units more renewable power by 2030.

Time-of-day pricing is already underway in some regions. Gujarat, for instance, offers a ₹0.60 per unit discount from 11 am to 3 pm for smart prepaid meter users.

The Frequency Challenge

The need for storage and flexible demand is becoming critical, not optional. Unchecked solar injection can affect grid frequency, as noted in the minutes of the 29th meeting of the National Committee on Transmission. The report highlighted that excessive solar power causes “persistent high frequency,” forcing thermal units to scale back—units that are still needed during non-solar hours.

As more solar is added without matching storage, managing coal-based generation during low-demand periods becomes increasingly difficult,” the report stated.

The Road Ahead

India’s transition to clean energy is picking up pace, but it must be accompanied by smart storage deployment, dynamic pricing, and regulatory innovation. The zero-price event on May 25 wasn’t just an outlier—it was a preview of what the future could look like if these signals are acted upon decisively.

A Broader Trend

Making the Case for Storage

Unlocking Market Potential

The Frequency Challenge

The Road Ahead

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