The proposed National Electricity Policy has raised serious concerns over the planned abolition of the Feed-in Tariff (FIT) for renewable energy developers, with industry experts warning that the move could undermine investments in the sector.
The Renewable Energy Developers Association (REDA) has called for immediate government intervention and the introduction of supportive policies to safeguard national energy security. According to REDA, the proposed removal of the FIT system—which currently supports around 92 per cent of renewable energy projects below 10 MW—poses a significant threat to small- and medium-scale local entrepreneurs. A REDA member told Sunday Times Business that these developers would be the most affected by the policy change.
He further stated that once broader structural issues are addressed, related challenges such as curtailment would also be resolved. Highlighting provisions in the proposed policy, he noted that curtailment is permitted on certain economic grounds. However, he pointed out that the policy has been drafted using outdated data, resulting in thermal power being presented as cheaper than solar power. Industry experts also emphasized the urgent need to revise the long-term generation planning cycle.
Rooftop solar currently contributes more than 20 per cent of the national grid’s 6,000 MW capacity.
Industry stakeholders have also raised concerns over the policy’s push towards competitive bidding, describing it as impractical for certain renewable energy technologies such as rooftop solar, mini-hydro, and biomass. They warned that this approach could lead to project delays and higher transaction costs, ultimately slowing the development of these technologies.
In addition, the policy introduces the concept of “uncompensated curtailment,” under which renewable energy developers would not receive compensation if the National System Operator (NSO) curtails their power output. An industry official cautioned that this provision could severely impact the financial viability of projects.
The official further noted that the removal of the FIT, combined with mandatory time-of-use tariffs for rooftop solar and the possibility of rupee-only contracts, significantly heightens financial risks for developers. These factors could render projects “un-bankable,” making it difficult for developers to secure financing from lenders.
