The Battery Revolution: Why India's FDRE and RTC Projects Face an Existential Crisis

India's renewable energy landscape is undergoing a fundamental shift that threatens the viability of the complex Firm and Dispatchable Renewable Energy (FDRE) and Round-the-Clock (RTC) models introduced just years ago. 

While these innovative project structures were heralded as the solution for reliable grid power, a powerful new competitor has emerged: the combination of standalone solar paired with Battery Energy Storage Systems (BESS). The competitive advantages of this simpler, lower-cost alternative are now exposing critical vulnerabilities in FDRE and RTC frameworks.

Shifted Economics: Battery Costs Are Collapsing

Battery prices have been undergoing a dramatic transformation, dropping considerably in recent times. For instance, as per a report released by SBI Capital Markets, the prices dropped nearly 50 percent from about USD 115/kWh (~10,400/kWh) in December 2024 to USD 55/kWh (~INR 5,000/kWh) in May 2025, with further declines in 2025. This has made standalone solar plus BESS combinations dramatically more cost-competitive than the traditional FDRE and RTC structures.​

The tariff disparities tell the story. In 2024, the lowest discovered tariff in solar+BESS tenders fell to INR 3.41 per kWh by December 2024, compared to the considerably higher rates for FDRE projects. Meanwhile, FDRE tenders that began in 2023 have seen a range of tariffs: the SJVN FDRE tender discovered INR 4.38 per kWh, while SECI's load-following FDRE tenders from mid-2024 ranged from INR 4.98 to INR 5.60 per kWh depending on demand fulfillment ratios.​

The RTC tariffs are comparably high. In the recent SECI RTC-IV tender for 420 MW, the discovered tariff was INR 5.06 - 5.07 per kWh, significantly higher than both standalone BESS and standard solar projects. This represents a fundamental economic disadvantage for developers seeking to finance these complex projects.​

Tender Undersubscription and Cancellations

FDRE and RTC projects are struggling to find takers. In 2024, approximately 8.5 GW of capacity in utility-scale renewable energy tenders was undersubscribed, five times higher than in 2023. Energy storage projects, predominantly FDRE tenders, account for approximately 44 percent of this undersubscribed capacity.​

More troubling is the pattern of cancellations. From 2020 to 2024, a total of 38.3 GW of utility-scale renewable energy capacity was cancelled, representing 19 percent of the cumulative capacity issued during this period. 

In 2023 alone, ESS-based renewable tenders (including FDRE) accounted for two-thirds of the cancelled capacity. This is not a minor market adjustment; it represents a wholesale rejection of the tender model by energy offtakers.​

Multiple other FDRE tenders have experienced similar underperformance, forcing tendering authorities to relax bid conditions to attract any participation at all. When SECI's FDRE-II tender initially failed to find buyers at INR 5.59 per kWh, the agency had to reduce the demand fulfillment ratio from 90 percent to 75 percent and relax frequency matching from 15-minute to hourly blocks just to achieve a marginally lower price discovery of Rs 4.98 per kWh.​

Why DISCOMs Are Walking Away

The root cause lies in the financial constraints of Distribution Companies (DISCOMs), which are the primary offtakers for these projects. India's state-owned DISCOMs are in severe financial distress, with accumulated losses of INR 6.92 trillion as of March 2024 (up 5 percent from INR 6.59 trillion in 2022-23). Outstanding debt rose by 12 percent in 2023-24 alone, climbing from INR 6.73 trillion to INR 7.53 trillion.​

Thus, DISCOMs are reluctant to sign long-term Power Sale Agreements (PSAs) for expensive FDRE and RTC power. The IEEFA's March 2025 report on India's tender-driven renewable market documents that cumulative unsigned PSA capacity has exceeded 40 GW, with SECI tenders alone accounting for approximately 12 GW as of January 2025. 

When DISCOMs do commit, they face stringent technical requirements that inflate project costs. The performance bank guarantees for FDRE tenders are approximately 45 percent higher than for corresponding solar tenders, a significant financial burden that discourages developer participation.​ The fact is that these discoms go by the rationale of getting the clean power at cheaper rates and could wait for a while by not accepting solar projects available at a comparatively higher price. 

The Solar Plus BESS Advantage: Simplicity and Control

In stark contrast to the complex FDRE and RTC models, standalone solar paired with BESS offers DISCOMs a fundamentally different advantage: control and flexibility. 

Rather than outsourcing demand management to a third-party developer who must maintain stringent performance ratios under penalty, DISCOMs can now procure solar and BESS as separate, simpler components and manage the integration themselves.

The Broader Crisis: 2023-24 Tender Rates as Evidence of Structural Weakness

The tender rates from 2023-24 provide the clearest evidence of FDRE and RTC projects' structural vulnerability:

FDRE Tender Rates (2023-24):

• SJVN FDRE tender (November 2023): INR 4.38 per kWh—the lowest discovered initially, but a market that struggles with demand

• SECI FDRE Tranche II (July 2024): INR 5.59 per kWh—so high that the tender failed to find buyers, forcing rate reductions

• SECI FDRE Tranche IV (August 2024): INR 4.98 per kWh—achieved only after relaxing demand fulfillment ratios

• NTPC FDRE tender: INR 4.69–4.70 per kWh—still significantly above competing technologies

RTC Tender Rates:

• SECI RTC-IV (2025): INR 5.06–5.07 per kWh—the most recent standard, reflecting highest complexity requirements

• Earlier RTC tenders (2023-24 period): INR 4.25–4.43 per kWh (REMCL 750 MW RTC auction)

For comparison, standalone solar tenders consistently achieved INR 2.3–2.7 per kWh throughout this period, while government-subsidized standalone BESS tenders are now discovering tariffs as low as INR 2.36–2.38 lakh per MW per month with VGF support.​

Strategic Pivot: DISCOMs' Rational Response

When viewed through a DISCOM's financial lens, the choice becomes rational. The discoms in India face increased integration of variable renewable energy, even forcing authorities to curtail green power in some areas due to oversupply. The key problem for them emanates at evening for peak load when the solar hour ends and the dependency shifts more towards thermal power for baseload.

Compared to the obligation of using green power from expensive FDRE and RTC projects, these discoms would love to enjoy cheaper solar power from solar+BESS projects for meeting their peak power demands in the evening from 6 pm-12 midnight. The latter gives more flexibility to the discoms with lesser cost. 

Going by the global experiences like from South Australia, we can see how the increased usage of BESS with solar can boost the increased infusion of solar power into the system and enable to making the grid greener. 

A financially stressed utility with accumulated debt of INR 6.92 trillion and insufficient revenue recovery will naturally prefer:

1. Modular components (solar and BESS purchased separately) over-integrated FDRE contracts that create fixed cost obligations regardless of actual grid conditions

2. Government-subsidized standalone BESS (40 percent capital support) over FDRE projects that require developers to absorb all integration costs

3. Shorter decision timelines with direct procurement rather than navigating complex FDRE technical specifications and penalties

The arrival of cheap, modular solar-plus-BESS solutions backed by government support has exposed the structural weaknesses of the previous systems. Between 2023 and 2024, the tender landscape fundamentally shifted away from FDRE's complex demand-following models and toward simpler configurations emphasizing peak-hour availability. Cancellation rates in excess of 65% for some FDRE variants and the consistent failure to achieve auction targets demonstrate that this is not a temporary glitch—it is a market signaling that a better solution exists.