Why is India paying more for floating solar?

Akshara (0:04)

In today's episode, we'll do one deep dive and cover another story for the day. First, we'll talk about why India is paying more for floating solar, and then we'll talk about what's behind India's first tokenized bond.

Welcome back to The Daily Brief by Zerodha, where we cut through the noise to help you understand what's actually happening in the most important stories from business and markets. I'm your host Akshara, and today is Friday, 11th September. Coming to the first story.

India has become remarkably good at building solar power. As of August 2026, the country had 168 gigawatt of solar capacity, and nearly 124 gigawatt came from utility scale projects, along with approximately 33 gigawatt of rooftop solar. Costs have fallen, developers know how to build these projects, and solar parks have gone from ambitious experiments to a fairly standard part of India's power system. And now, the government wants to put solar panels on water. So in July, the Union Cabinet approved the Pradhan Mantri Surya Sarovar Yojana, or PMSSY. It will spend around Rs 5070 crore to support 5 gigawatt of floating solar projects, each accompanied by at least 2 hours of energy storage. Prime Minister Modi even shared a carousel about it on Instagram. But this is not an obvious bet. Floating solar is harder to build, trickier to maintain, and generally more expensive than solar on land. And India currently has only around 0.7 gigawatt of it. The new scheme could increase that 8-fold. And according to the National Institute of Solar Energy, or NISC, the country has around 102 gigawatt of technical floating solar potential. Now those numbers look attractive. But the economics suggest something rather less straightforward. At first glance, floating solar may not look particularly revolutionary. After all, the solar cells do the same job as those in any other solar plant. They convert sunlight into direct current electricity. And inverters turn that into alternating current, and transformers speed it into the grid.

But the difference lies in everything holding the panels up. See, a ground-mounted project fixes its modules onto steel piles or concrete foundations. But a floating project places them on interconnected plastic floats. And according to a World Bank study, 90% of floating solar projects use high-density polyethylene or HDPE, which is a buoyant and durable plastic commodity, which is also found in pipes and shampoo bottles. These floating islands must then be anchored to the reservoir bed or shore, so they do not drift away. So the anchoring system must handle waves, currents, and changing water levels, and cables must be able to withstand moisture and constant movement. The panels are also kept at angles below 15 degrees, compared to 15 to 35 degrees for land solar. And this reduces the wind load on the floating structure. Now, construction happens partly onshore, after which the assembled sections are pushed into the water. Maintenance may require floating walkways, boats, and even human divers. NTPC's 100-megawatt Ramaguntam project, for instance, was divided into 40 floating blocks, and each block contained 11,200 modules, along with an inverter, transformer, and high-voltage breaker mounted on a floating platform. Floating solar places a familiar power plant on a much more difficult surface, and the complications can be serious, ranging across humidity, corrosion, electrical hazards, and the constant movement of the floating structure that makes these problems much harder than usual. So why bother putting solar on water at all? That requires thinking of a standard solar project as a land acquisition problem first. So a large solar project needs a large, uninterrupted parcel of land, and acquiring it can take time, particularly when ownership is fragmented, or the land supports agriculture or local communities. Theoretically, India is not literally running out of land for renewable energy. A CEEW assessment found that land constraints remain relatively manageable until India crosses roughly 1,500 gigawatt of renewable capacity. But that is not the same as easy access. CEEW also found that only 27% of India's solar potential lies in areas with fewer than 250 people per square kilometre. And only 41% is in areas free from historical land conflicts, while just 22% is located in places that combine low land prices with low climate risk. But beyond sidestepping land issues, floating solar's stronger advantage may be access to the grid.

So a solar park needs more than just panels and land. It also needs substations and transmission lines to carry the electricity elsewhere. And building this infrastructure can require more land and take much longer than constructing the solar plant itself. We are already seeing the consequences of not having built this transmission infrastructure. According to Ember, India curtailed around 300 million units of renewable electricity because of transmission constraints in the first quarter of 2026 And that accounted for nearly two-thirds of all electricity curtailed during the period. So this is where certain water bodies become useful. Hydropower reservoirs, power station reservoirs and industrial cooling ponds may already sit beside substations, transmission lines and trained staff. And Ramakundam is a good example. Its 100-megawatt floating project was built on NTPC's own reservoir and connected to the plant's existing switchyard. And NTPC followed a similar playbook elsewhere. By August 2022, it had commissioned 242-megawatt of floating solar across reservoirs attached to its power stations. Now, these sites don't make floating solar cheap, but they allow NTPC to reuse land, reservoirs and grid infrastructure it already controls. Now, floating solar has a few other advantages. Although each comes with a rather large asterisk. The first is efficiency. Solar panels become less efficient as they heat up, and the water beneath them can keep them cooler.