India Shifts Renewable Energy Strategy to Grid Integration; Rejects 'Blanket' Bid Cancellations
SDG 7: Affordable and Clean Energy | SDG 9: Industry, Innovation and Infrastructure
Institutions: Ministry of New and Renewable Energy (MNRE)
The Ministry of New and Renewable Energy (MNRE) has announced a new phase for India’s renewable energy (RE) strategy, shifting focus from rapid capacity addition to deeper structural integration encompassing grid strength, storage deployment, and market reform. India’s installed RE capacity now exceeds 197 GW (excluding large hydro), a substantial increase from 35 GW in 2014.
The government agencies responsible for Renewable Energy (RE) projects have given the go-ahead (awarded contracts for) 43,942 Megawatts (MW) of power. However, these projects are now stuck because they haven’t finished the final, critical step: getting the Power Sale Agreements (PSAs) formally signed with the local electricity providers (discoms) (the local electricity companies haven’t agreed to buy the power yet).
The Government has now chosen to adopt a nuanced, case-by-case approach representing a strategic policy decision to provide stability and confidence in the renewable energy sector. The key elements of this policy are:
Explicitly Ruled Out: Blanket cancellations have been explicitly ruled out.
Last Resort Only: Cancellation is to be used only as a last resort.
Condition: Cancellation is reserved for projects with “minimal or no prospects of PSA execution“ and only after thoroughly exploring all feasible options.
This policy move stabilizes the volatile renewable energy investment environment by providing regulatory clarity and rejecting wholesale project cancellations, thereby protecting investor confidence. It signals the Government’s commitment to enabling the next phase of India’s energy transition, which prioritizes grid stability and dispatchable power (power that can be controlled and dispatched when needed, often via storage) over raw capacity addition.
What is the significance of the Power Sale Agreement (PSA) in renewable energy project bids?→ The PSA is a binding contract between the power producer (the successful bidder) and the discom or end procurer that legalizes the sale of electricity, and major project investment generally begins only after its execution. The lack of a finalized PSA is the core barrier stalling nearly 44 GW of awarded projects, making the PSA critical for ensuring project financial viability and timely contribution to the national grid.
Relevant Question for Policy Stakeholders: How will the Ministry define and enforce “minimal or no prospects of PSA execution” to ensure transparency and timely resolution for the over 43,000 MW of stalled capacity?
Follow the full news here: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2186235