Stranded Renewable Energy Assets: Case Studies and Legal Challenges in India

As India pushes forward with its ambitious renewable energy targets, investors face growing concerns over stranded assets—projects that lose their value due to various market, regulatory, and legal factors. Here, we examine five specific cases in India where renewable energy assets became stranded, highlighting the legal disputes and challenges associated with each.

1. Andhra Pradesh Solar PPA Renegotiation Dispute

In 2019, the Andhra Pradesh government attempted to renegotiate existing Power Purchase Agreements (PPAs) for solar projects, aiming to reduce tariffs from ?4-6/kWh to around ?2.44/kWh, citing inflated prices. This move affected developers like Greenko and Acme Solar, whose solar assets became stranded as the state sought to void earlier agreements.

The developers filed legal suits in the Andhra Pradesh High Court to challenge the state’s decision. While the court allowed interim relief with payments at reduced tariffs, the long-drawn legal battle has left these projects stranded, as potential buyers are hesitant to acquire assets tied to ongoing disputes. This example shows how legal uncertainties can hinder capital recycling and create stranded assets(Strategic investment ri…).

2. Curtailment of Wind Power in Tamil Nadu

Tamil Nadu, a key state for wind energy, has faced recurrent issues with curtailment. In 2018, wind projects owned by companies like Suzlon and Inox Wind saw frequent curtailments due to grid congestion and low power demand, particularly during high wind seasons. Older projects with tariffs of ?5-6/kWh were hit the hardest.

These curtailments led the Wind Independent Power Producers Association (WIPPA) to initiate legal action against the Tamil Nadu Generation and Distribution Corporation (TANGEDCO), accusing it of violating the "must-run" status of wind projects. The ongoing litigation has made it difficult for these wind assets to attract new buyers or investors, effectively rendering them stranded(Strategic investment ri…).

3. Rooftop Solar Projects in Maharashtra: Offtaker Risk

In Maharashtra, several commercial rooftop solar projects became stranded due to offtaker financial instability. During the COVID-19 pandemic, numerous small-to-medium enterprises (SMEs) that had installed rooftop solar panels were unable to meet payment obligations. This caused cash flow problems for developers such as Tata Power Solar, leaving them with operational but unprofitable assets.

The legal disputes over non-payment have dragged through arbitration under the Indian Arbitration Act. While arbitration offers a potential solution, the slow process has worsened the financial viability of these rooftop solar projects, stranding them with no immediate prospects of sale or reinvestment(Strategic investment ri…).

4. Stranded Solar Projects in Rajasthan Due to Transmission Delays

In Rajasthan, developers like Adani Green and Azure Power faced significant delays in grid connectivity for their large-scale solar projects. Despite being operational, these solar plants could not supply power to the grid due to the incomplete transmission infrastructure.

The developers took legal action against Rajasthan Rajya Vidyut Prasaran Nigam Limited (RVPNL), claiming that the state’s failure to provide transmission access violated their contractual agreements. The projects remained stranded during the litigation process, as investors hesitated to acquire assets without guaranteed grid connectivity(Strategic investment ri…).

5. Coal Dependency Stranding Solar Projects in Jharkhand

In Jharkhand, ReNew Power’s 150 MW solar project became stranded as the state’s distribution companies (DisComs) favored coal-fired power due to existing long-term coal PPAs. Despite the growing push for renewable energy, the state’s overreliance on coal left no room for the solar project to secure buyers.

ReNew Power initiated arbitration proceedings against the DisComs for failing to fulfill their obligations under the PPA. The legal complexities surrounding coal and renewable energy contracts made it difficult to find alternative buyers for the project, stranding the asset(Strategic investment ri…).

Conclusion

These five cases demonstrate the variety of challenges that can turn renewable energy projects into stranded assets in India. From PPA renegotiations and curtailment to offtaker risks and transmission delays, each example underscores the critical role of legal disputes in creating stranded assets. Investors in India’s renewable energy market must be prepared to navigate these risks through due diligence, diversification, and strategic legal safeguards.