Power distributors in India are opting to negotiate ten year agreements with coal power providers, rather than traditional 25-year deals. The stretched distributors believe the accelerated development of renewables and storage makes such long term agreements redundant.

“In the next five to 10 years battery storage may be coming in a big way,” Deepak Amitabh, chairman of state-owned power-trading company PTC India Ltd., told Bloomberg, adding that longer-term power contracts have all but disappeared in the past two years except in the clean-energy segment.
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India invested in its first overseas battery-storage project in a deal announced earlier this month. One goal is to learn better methods of stabilizing the electricity grid back home as Prime Minister Narendra Modi targets almost tripling renewables capacity to 175 GW by 2022.

“Why would buyers of power choose to lock themselves in high-priced long-term contracts when they can be reasonably certain of softer prices in the future, either via direct procurement deals with renewable-power generators or at the power exchange?” said Vandana Gombar, global policy editor at Bloomberg New Energy Finance in New Delhi.

Solar and wind have become the cheapest sources of power in the country, with tariffs dropping to among the lowest in the world. Meantime, coal-fired power plants are struggling to find customers and ease a capacity glut.

There are currently 25 GW of coal-fired power-generating capacity stranded and unused in India.