Falling renewable energy tariffs in India have prompted some state governments to tell generators that they can’t buy the energy at prices agreed upon, exposing the businesses to risks due to poor enforcement of contracts in Asia’s third-largest economy.

Investors panicked earlier this year when the southern states of Andhra Pradesh and Karnataka, which account for a quarter of the country’s wind installations, backtracked on many purchase agreements to lower prices. Reason: cost per unit of power had fallen to a record low of 3.46 rupees in the country’s first wind auctions held in February.

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