Not planning blanket cancellation of stuck RE projects, says govt

The government is not considering blanket cancellation of renewable energy projects that are awaiting the signing of Power Sale Agreements (PSAs) with power distribution companies, the Ministry of New and Renewable Energy (MNRE) clarified on Monday in response to recent media reports that projects of 43 gigawatt (GW) capacity are facing cancellations.

 

“The government is actively exploring mechanisms with stakeholders to optimise transmission capacity and improve the contracting framework. These efforts include examining the feasibility of signing PPAs and PSAs for certain awarded capacities and reviewing provisions such as the green shoe option. No blanket cancellations of the bids are being envisaged,” MNRE said in a statement.

   

As of September-end, the Renewable Energy Implementing Agencies (REIAs) have issued Letters of Award (LoAs) for 43,942 megawatt 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, these agencies have successfully signed PSAs for 24,928 MW capacity, indicating continued progress in contract execution and market alignment,” the ministry said.

 

The government is closely monitoring all such cases where Letters of Award have been issued but PSAs have not yet been finalised. A few discoms have expressed apprehensions about signing PSAs for such bids where the likely start date of connectivity for the successful bidders is in the distant future. The ministry has advised the REIAs to carry out due diligence by reviewing and categorising such cases based on the likelihood of securing PSAs with end procurers.

 

The ministry said this assessment would consider multiple factors, including the configuration of renewable energy envisaged to be supplied under the bid, the discovered tariff for the supply of renewable power, and the expected timeline for connectivity.

 

“Following this review, only those LoAs with minimal or no prospects of PSA execution may be considered for cancellation on a case-by-case basis. Even then, such cancellations are expected to be phased and undertaken only after all feasible and viable options for executing the PSAs and corresponding Power Purchase Agreements (PPAs) have been thoroughly explored,” MNRE clarified.

 

It also said that apprehensions regarding the likelihood of massive investments in renewable power getting into limbo on account of the cancellation of LoAs that cannot secure PSA/PPA are unfounded, since major investment in any renewable power project starts only after the execution of the PPA. Any investments made by power developers in land or connectivity are used for other existing or future projects in their portfolio.

 

In order to facilitate the execution of PSAs, the government has taken several proactive measures, including urging the 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 designing and issuing tenders.

 

The ministry also said that transmission infrastructure is being scaled up to match the pace of renewable energy deployment and that the Rs 2.4 trillion investment plan for transmission associated with 500 GW of renewable energy, along with recent amendments to the General Network Access (GNA) regulations, will unlock stranded capacity and enable dynamic corridor sharing.