93 GW renewable backlog triggers government action on unsigned PPAs and PSAs

The Ministry of Power has directed Renewable Energy Implementing Agencies (REIAs) to close long-pending renewable energy bids and cancel related Letters of Award (LoAs) by November 30, 2025, where signing Power Purchase Agreements (PPAs) or Power Sale Agreements (PSAs) is not viable. The order follows a review meeting held on October 17, 2025, chaired by Secretary (Power) Pankaj Agarwal, to assess renewable capacity procurement by NTPC, NHPC, SJVN, and SECI.

Since FY 2023-24, the REIAs have tendered 93 GW of renewable capacity. However, only 23 GW have concluded with signed PPAs and PSAs, while 42 GW remain without agreements. The agencies attributed the backlog mainly to weak demand from state distribution companies (discoms), particularly for solar projects. SECI informed the ministry that it has already cancelled LoAs for projects where PSAs cannot be finalised, except for its manufacturing-linked tender.

During the meeting, the Secretary (Power) outlined specific measures to accelerate implementation. REIAs were allowed to execute PPAs on their own, without waiting for a state PSA, to prevent further project delays. The ministry also clarified that the ‘Green Shoe Option’—used to procure additional capacity beyond the bid amount—deviates from the Standard Bidding Guidelines (SBG) and should be discontinued immediately.

A key policy amendment was also proposed regarding penalty recoveries from developers. Currently, penalties such as encashed Bank Guarantees (BGs) are deposited in the Payment Security Fund (PSF) of the intermediary procurer. Following inputs from PSPCL and SECI, the ministry decided that the SBGs will be revised to ensure that such recoveries are transferred directly to the end procurers, that is, the state discoms.

Other discussions included allowing a parent company, instead of only a Special Purpose Vehicle (SPV), to sign PPAs in specific cases, subject to regulatory approval. REIAs were asked to engage with procurers and State Electricity Regulatory Commissions (SERCs) where required. The Secretary (Power) also advised SECI to explore a pilot renewable project under a Bilateral Contract Settlement mechanism, which SECI confirmed is under consideration.

The meeting was attended by senior officials from the Ministry of Power, the Ministry of New and Renewable Energy (MNRE), the Central Electricity Authority (CEA), CTUIL, and the heads of all four REIAs.