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Current Challenges And Issues In the Country

As of 2026, India stands at a point where it is on a crossroads in its energy journey. It has achieved pivotal accomplishments in terms of reaching an installed power capacity of over 520 GW and bringing the national power shortage down to 0.03%.
In the current scenario, considering the installed capacity is looking at only half of the story. However, as the country advances towards its 2030 climate goals, newer and more complex challenges are emerging that have got more to do than just requiring more solar panels. It will require a fundamental shift in how we manage, store and distribute energy.
Here are the current issues India’s energy sector is currently facing and how we can address them:

1. Surplus Vs. Scarcity

In the last fiscal year alone, India has added a record-breaking solar capacity of over 30GW. However, there remains a significant gap between the capacity and actual generation. 

  • The Issue:Despite the fact that renewable energy makes up over 50% of installed capacity, it accounts for just around 20-26% of actual power output. 
  • The Impact: During peak solar hours, the grid often faces a “surplus” that it cannot handle, leading to curtailment—where clean energy is essentially wasted because the system cannot absorb it.

2. Energy Storage 

Solving the “Evening Peak” problem is a must to achieve a truly green grid. Though solar power is abundant at noon, its demand peaks when the sun goes down. 

  • Storage Scale:While the Budget 2026-27 introduced welcome tax exemptions for Battery Energy Storage Systems (BESS), large-scale deployment still lags behind.
  • Supply Chain Dependency:India still relies heavily on imported cell technologies. Developing domestic, cost-effective storage solutions is no longer a luxury—it is a necessity for energy sovereignty.

3. Grid Constraints

One of the major issues the industry is currently facing is that the speed of solar installation has outpaced the development of transmission infrastructure needed to move that power. 

  • Transmission gaps:Many high-potential renewable zones (like parts of Rajasthan and Gujarat) face “evacuation” issues. If the “energy highway” isn’t wide enough, the power stays stuck at the source.
  • Climate Resilience: With 2026 seeing increased monsoon variability and extreme heat, the physical grid is operating near its thermal limits, leading to higher risks of localized outages during peak demand.

4. DISCOM

The distribution Companies (DISCOM’s) have been one of the weakest links in the chain.

  • Digital Transformation:While the rollout of 4.05 crore smart meters has improved transparency, many states still struggle with legacy infrastructure and financial inefficiencies.
  • The solution:Transition to Time-of-Day (ToD) tariffs can prove to be the most effective solution. It is a system where electricity is cheaper when renewable supply is high. This will encourage consumers to shift their usage patterns. 

5. The USA-Iran War

The 2026 USA-Iran War has placed solar encapsulant manufacturers in a unique and challenging situation. While the war has supercharged the demand for solar energy as a path to national security, it has simultaneously crippled the supply chain for the chemical polymers required to build solar modules.

  • The Raw Material Price Spike:The primary raw material of the solar industry are its encapsulants – EVA (Ethylene Vinyl Acetate) and POE (Polyolefin Elastomer) which are direct derivatives of the petrochemical industry. With 20% of global oil and gas flowing through the Strait of Hormuz disrupted, the feedstock for ethylene has seen a massive price surge. Encapsulant manufacturers are reporting raw material cost increases of 18–22% in just the last 45 days. Small and mid-sized producers are struggling to maintain margins. 
  • Accelerated Shift (EVA to POE and Co-extrusion):The war is forcing a technical evolution faster than the market anticipated. As fossil fuel prices skyrocket, the demand for high-efficiency TOPCon and HJT modules (N-type cells) has spiked. These modules require POE or EPE (co-extruded) films because standard EVA degrades faster under the higher voltage and thermal stresses of these newer cells. Manufacturers are moving to POE not just for performance, but as a risk-mitigation strategy to diversify away from the heavily disrupted standard vinyl acetate supply chains. 
  • Logistical Roadblocks for Asian Manufacturers:More than 52% of the global market share for solar encapsulants is accounted for in Asia. The maritime conflict in the Middle East has forced vessels to reroute around the Cape of Good Hope, adding 10–14 days to shipping times for resins moving from the Middle East to manufacturing hubs in India and Southeast Asia. Fearing a prolonged conflict beyond the current two-week ceasefire, larger module manufacturers are “panic-buying” encapsulant rolls, creating an artificial shortage for smaller installers and residential solar projects.

THE TERASOL PERSPECTIVE: BUILDING A RESILIENT FUTURE

At Terasol Energy, we don’t just see these as “problems”—we see them as a roadmap for innovation. Our focus in 2026 is moving beyond simple installation toward Integrated Energy Ecosystems. We are championing solar-plus-storage projects that allow businesses to “shift” their solar generation for use during expensive peak hours. By utilizing advanced encapsulants and high-performance PV modules, we ensure that every ray of sunlight captured delivers maximum yield, reducing the burden on the grid.
The challenge of 2026 is not “how much” energy we can produce, but “how well” we can use it. By focusing on grid flexibility, domestic storage innovation, and smart distribution, India can turn these current hurdles into the foundation of a world-leading green economy.
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