New Delhi, Jan. 10 -- A deluge of solar power and rules binding electricity distributors to purchase it are prompting distress sales on India's electricity exchanges, trade data showed. Discoms sitting on excess power often sell it on exchanges at a loss, as the alternative would be to receive nothing, given the weak demand during solar hours.

On the country's largest exchange, Indian Energy Exchange, prices during peak solar time have recently crashed to as low as Rs.0.50 per unit, while long-term contracts typically lock discoms into paying between Rs.2 and Rs.3.50 per unit.

The surplus power reveals a bottleneck. India's rapid expansion of green energy is outpacing its ability to store or manage the power effectively. With compulsory...