SJVN’s Curtailment Losses Explained

When you hear that India is adding more solar and wind capacity every year, it sounds like straightforward growth, right?

But here’s something most people don’t immediately think about, what if the power being generated doesn’t fully reach the grid?

That’s exactly what’s happening in some cases, and it’s called curtailment. And for companies like SJVN, it quietly changes how much of that growth actually turns into revenue.

What Exactly is Curtailment?

Curtailment happens when a solar or wind plant can generate electricity, but the grid cannot absorb all of it. In simple terms, power is produced but not fully used.

This usually happens due to transmission bottlenecks, low demand, or lack of storage capacity. For renewable companies, it means lower revenue even though the plants and operating costs remain the same.

Why is SJVN Vulnerable?

SJVN is vulnerable because it is rapidly expanding its renewable energy capacity while also increasing capex and borrowing. If power generated from new solar and wind projects cannot be fully evacuated through the grid, the company may face lower utilisation and weaker returns on those investments.

This becomes more important as interest costs are already rising, meaning profitability depends not just on adding capacity, but on successfully selling the electricity generated.

Financial Snapshot FY26

SJVN’s standalone FY26 revenue from operations rose 22% YoY to ₹3,545 crore, compared to ₹2,897 crore in FY25.

However, a major part of this increase came from tariff true-up adjustments. The company recognised around ₹679 crore of earlier-year sales following tariff orders for the Nathpa Jhakri and Rampur hydro projects.

Q4 FY26 revenue also jumped sharply to ₹934 crore from ₹446 crore last year.

This is important because headline revenue growth looks very strong, but a large portion was driven by regulatory tariff adjustments rather than purely higher generation or utilisation.

Curtailment & Grid Issues: Bikaner & Khavda

The 1,000 MW Bikaner solar plant is currently facing ~120 MW curtailment due to grid compliance requirements, specifically the need for reactive power compensation equipment (SVR/reactor).

This was mandated by updated CEA rules introduced mid-project, but limited supplier availability has delayed installation.

Management expects the equipment to be in place by Oct 2026, after which full 1,000 MW operations should resume.

At Khavda (Gujarat), ~300 MW curtailment risk exists due to possible transmission and connectivity delays.

Even after commissioning, renewable projects can face temporary output loss due to grid and transmission constraints, delaying full utilisation and earnings ramp-up.

Installed Capacity vs Real Earnings Capacity

In renewable energy, installed capacity does not always reflect actual earnings potential.

Even if a plant is fully built, factors like curtailment, grid readiness, and transmission delays can reduce the effective output. This leads to a gap between what a project is capable of generating and what it actually delivers.

For companies like SJVN, this means CUF and revenue growth can stay under pressure even during capacity expansion phases, until evacuation infrastructure stabilises.

As a result, investors need to focus not just on how fast capacity is added, but how efficiently that capacity is converted into actual power sales.

Financial Impact of Curtailment

Curtailment may appear temporary, but its impact is structural for companies like SJVN that are scaling renewable capacity aggressively.

When plants cannot produce or sell all the electricity they are capable of, their actual usage stays lower than expected. This means the company does not get full benefit from the money spent on building the plant.

The problem becomes more important because most costs do not change much. Loan repayments, maintenance, and other fixed expenses still have to be paid even if power sales are lower.

So, even if SJVN is adding a lot of new capacity, its earnings may not increase in the same way until these grid and transmission issues are solved.

Why is this Becoming an Industry-wide Issue?

Curtailment is becoming a sector-wide issue, not limited to SJVN. Developers like NTPC Green, Adani Green, and other solar players are also facing similar challenges as capacity grows faster than grid infrastructure.

In many cases, temporary grid access (TGNA) limits, delayed transmission lines, and interstate bottlenecks restrict power evacuation even after commissioning.

The problem is worsened by limited storage capacity, since excess solar generation cannot always be absorbed.

As a result, many projects are seeing a gap between installed capacity and actual output until the grid and storage ecosystem catches up.

The Biggest Investor Question

The key question is: can renewable PSUs sustain returns if curtailment grows faster than grid upgrades?

Rising debt, execution delays, and utilisation risk make earnings less predictable, especially when evacuation depends on transmission readiness and policy timelines.

This is not a bearish view on the sector. The long-term renewable opportunity remains strong.

But the next phase will reward companies that solve grid integration and storage, not just capacity addition.

Conclusion

SJVN is still growing fast, and the long-term outlook for renewable energy in India remains strong.

But the main point is simple: building more capacity is not enough if all the power cannot be sold.

Until the grid improves, curtailment will keep affecting how much companies actually earn from their projects.

So the real thing to watch is not just capacity growth, but how much of it turns into real revenue.

About the Author

Sargundeep Kaur

I’m a BCom student with a deep interest in stock markets, financial analysis, and long-term investing. My goal is to create easy-to-understand articles that combine financial concepts with practical market insights.

View All Articles by Sargundeep Kaur