The Ministry of New and Renewable Energy (MNRE) has approved a pilot Contracts for Difference (CfD) scheme, to be implemented by Solar Energy Corporation of India (SECI) for 500 MW/ 1,500 MWh, focused on non-solar hours.

A CfD is a two-sided price hedge: the renewable generator is paid the difference when market prices fall below a pre-agreed strike price, and pays back when prices exceed it.

India’s version is tailored to solve a specific problem — the evening peak. “By targeting the three non-solar hours, MNRE’s new CfD guidelines directly address India’s evening peak and indirectly encourage pairing of solar with BESS for flexible dispatch,” notes Vinay Pabba, CEO, Vibrant Energy.

Some design choices are worth noting. The 12-year tenor is shorter than the global norm of 15–20 years. This could push up bid prices, as developers price in uncertainty beyond the contract period. If CfDs are to scale up meaningfully in India, a longer tenor may be necessary.

The plan envisages a ₹76-crore stabilisation fund. This is “fiscally conservative and politically intelligent,” says Pabba, while also pointing out that by capping the government’s risk to ₹76 crore and passing on the excess risk of the pool losses to SECI, bankability can get diluted for generators.

The mandated bidding sequence — ‘Green Day Ahead Market’ to ‘Day Ahead Market’ to Real Time Market — is a strong intervention. It prioritises green market participation, reduces volumes, and could minimise disputes around curtailment and non-clearance.

Less orthodox is the 30:70 sharing of gains and losses between the generator and the CfD pool. In classic CfDs, generators face the full upside and downside relative to the strike price. Diluting this linkage may weaken price signals and reduce incentives for optimal market behaviour. Similarly, the requirement that renewable energy certificate revenues from brown market sales should be credited to the pool strengthens the scheme’s finances, but removes a potential upside for developers — again likely to be reflected in higher bids.

Overall, the pilot is less about adding megawatts and more about integrating renewables into the grid — specifically to meet demand when solar is unavailable. That is where India’s next energy challenge lies.

Green India mission limps

The government runs two key initiatives under the National Mission for a Green India: Green India Mission, aimed at protecting, restoring and enhancing India’s forest cover; and forest fire prevention and management. Yet the Ministry for Environment, Forests and Climate Change has not been able to spend the money allocated to it. A parliamentary standing committee that went into the financial demands of the ministry has noted that Budget 2025-26 had allocated ₹220 crore to the mission and this was reduced to ₹95.7 crore at the ‘revised estimates’ stage — 44 per cent of the initial allocation. The ministry admitted to the committee that the reduced allocation “slows afforestation and eco-restoration activities, reduces the area of degraded forests taken up for treatment, delays new landscape-based interventions and constrains support to Joint Forest Management Committees (JFMCs), capacity building, micro-planning, and livelihood activities linked to non-timber forest produce (NTFP) and eco enterprises”. However, the ministry could not spend even the reduced allocation. Till end -January this year, it had spent only ₹49.95 crore, or 43 per cent of the reduced revised allocation. The committee has asked the ministry to “examine the slow progress of funds utilisation”.

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Published on April 13, 2026