Dispelling reports of blanket cancellations, the Ministry of New and Renewable Energy has clarified that only letters of award with minimal or no prospects of power sale execution may be considered for cancellation, and only after a detailed review.
The government has initiated steps to strengthen mechanisms for optimising transmission capacity and improving the contracting framework to resolve issues surrounding long-pending power purchase agreements (PPAs) and power sale agreements (PSAs), according to a statement from the Ministry of New and Renewable Energy (MNRE).
On September 22, Infrastructure Today reported that MNRE Minister Pralhad Venkatesh Joshi had proposed meetings with state governments to address the logjam over stalled projects.
As of September 30, Renewable Energy Implementing Agencies (REIAs) had issued Letters of Award (LoAs) for 43,942 MW of capacity, where PSAs with end procurers remain unsigned. This figure reflects the scale of recent bidding activity and the evolving nature of demand aggregation and procurement timelines. Since April 2023, REIAs have successfully signed PSAs for 24,928 MW, indicating continued progress in contract execution and market alignment.
Other efforts include assessing the feasibility of signing PPAs and PSAs for certain awarded capacities and reviewing provisions such as the green shoe option. This option allows REIAs to procure additional capacity—typically up to 25 per cent more—beyond the initially awarded quantum under the same terms and conditions. MNRE has clarified that it is not considering blanket cancellations of previously awarded bids.
Cases where LoAs have been issued but PSAs with distribution companies (DISCOMs) or end procurers remain pending are being closely monitored. Some DISCOMs have expressed reservations about signing PSAs for bids where the likely connectivity start date is distant. REIAs have been advised to conduct due diligence by reviewing and categorising such cases based on the likelihood of securing PSAs. This assessment will consider factors such as the configuration of renewable energy to be supplied, the discovered tariff, and the expected connectivity timeline.
Following this review, only LoAs with minimal or no prospects of PSA execution may be considered for cancellation, and even then, only on a case-by-case basis. Such cancellations are expected to be phased and undertaken only after all feasible options for executing the PSAs and corresponding PPAs have been thoroughly explored.
MNRE has dismissed concerns that large investments in renewable power are at risk due to cancelled LoAs without signed PSAs or PPAs. It clarified that major investments typically begin only after a PPA is signed, and any early spending on land or connectivity is usually repurposed for other current or future projects in the developer’s portfolio.
Contracting and Grid Reforms
To facilitate PSA execution, the government has taken several proactive steps. These include urging states to comply with the Renewable Consumption Obligation (RCO) under the Energy Conservation Act, and advising REIAs to aggregate demand from DISCOMs and other consumers before issuing tenders. Regional workshops have been held with major renewable energy-procuring states to address implementation challenges and accelerate PSA signing.
In addition, the Standard Bidding Guidelines for solar, wind, hybrid, and firm and dispatchable renewable energy (FDRE) have been amended to allow cancellation of LoAs that remain unexecuted beyond 12 months from the date of issuance.
A key objective remains the optimisation of renewable energy costs and associated transmission infrastructure. “With the declining cost of solar-plus-storage and dispatchable renewable power, there is a growing preference among distribution companies and end procurers for such solutions,” MNRE stated. “This shift has been accompanied by reduced demand for plain solar power. Solar-plus-storage configurations are also proving more economically viable than wind-solar hybrid projects, particularly due to their ability to supply power during peak demand hours.” Accordingly, the government is encouraging REIAs to move from plain solar tenders to those configured for solar-plus-storage, peak-hour supply, and FDRE.
Transmission infrastructure is also being scaled up to match the pace of renewable energy deployment. The ₹2.4 trillion investment plan for transmission linked to 500 GW of renewable energy, along with recent amendments to the General Network Access (GNA) regulations, aims to unlock stranded capacity and enable dynamic corridor sharing. These reforms are expected to ease congestion and improve grid access in renewable-rich states.