The Ministry of New and Renewable Energy (MNRE) has clarified that there will be no blanket cancellation of projects awarded by renewable energy implementing agencies (REIAs) where power sale agreements (PSAs) remain unsigned.

Instead, the Ministry will adopt a case-by-case approach, emphasizing grid readiness, transmission capacity, and market reforms to ensure sustainable expansion.

MNRE stated that it is conducting detailed due diligence on all unsigned PSAs. REIAs have been directed to categorize projects based on their likelihood of securing PSAs with end procurers, considering factors such as configuration of renewable supply, discovered tariffs, and connectivity timelines.

Only those letters of award (LoAs) with minimal or no prospects of PSA execution may be considered for cancellation, and even then, only after all feasible options have been explored.

To accelerate PSA execution, the government has initiated several proactive steps. It has urged states to comply with the renewable consumption obligation under the Energy Conservation Act. It also advised REIAs to aggregate demand from DISCOMs and other consumers before designing and issuing tenders. It has also suggested conducting regional workshops with major renewable-procuring states to resolve implementation challenges and expedite PSA signing.

The MNRE is urging REIAs to shift from plain solar tenders toward more flexible and grid-friendly configurations such as solar-plus-storage, peak-hour supply, and firm and dispatchable renewable energy (FDRE).

This change reflects evolving market preferences with DISCOMs and end procurers increasingly seeking dispatchable power that can meet peak demand hours and improve reliability.

The Ministry noted that solar-plus-storage projects are becoming more economically viable than wind-solar hybrid power projects, given their ability to supply power during peak hours and enhance grid stability.

As of September 30, 2025, REIAs had issued Letters of Award for 43,942 MW of capacity where PSAs remain unsigned. Since April 2023, PSAs have been successfully signed for 24,928 MW, showing steady progress in aligning bids with market demand and grid timelines.

The MNRE has instructed REIAs to review all pending cases and categorize them based on PSA prospects, to ensure transparency and balance between developers and distribution companies (DISCOMs).

Some DISCOMs have been hesitant to sign PSAs where project connectivity timelines are far into the future. Following the review, REIAs may propose phased cancellations only for projects deemed unviable.

The government has also amended the standard bidding guidelines for solar, wind, hybrid, and firm and dispatchable renewable energy (FDRE) tenders to allow the cancellation of LoAs that remain unexecuted beyond 12 months from the date of issuance.

Mercom has previously written about how delays in finalizing PSAs are creating significant obstacles for developers and policymakers alike.

Shift from Capacity Addition to Integration and Reliability

India’s renewable capacity has grown rapidly, placing the country among the world’s fastest-growing clean energy markets. With this achievement, the focus has now shifted from rapid capacity addition to deeper structural integration, including storage deployment, transmission strengthening, and market-based reforms.

The government stated that this transition marks a move toward maturity and consolidation, ensuring that new renewable capacity can be effectively integrated into the grid while maintaining reliability and cost efficiency.

A major component of this integration strategy is the ₹2.4 trillion (~$27.06 billion) transmission expansion plan associated with the 500 GW renewable energy target. This plan, coupled with recent amendments to general network access regulations, aims to unlock renewable corridors, enable dynamic corridor sharing, and ease grid congestion in renewable-rich states.

These transmission and regulatory reforms are designed to optimize renewable evacuation, improve utilization of existing infrastructure, and enhance investor confidence by ensuring smoother project commissioning.

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