The Ministry of Power has ended the uniform renewable energy tariff (URET) mechanism in response to concerns of renewable energy implementing agencies and developers over the reluctance of procurers to sign power purchase agreements (PPA).

The Ministry said that in light of the substantial renewable energy capacity awaiting the signing of power sale agreements (PSA) and to expedite the deployment of renewable energy, it had decided to withdraw the URET mechanism.

In February 2024, the government announced the commencement of a ‘Solar Power Central Pool’ and ‘Solar-Wind Hybrid Central Pool’ under URET for three years until February 2027.

The URET mechanism was introduced to address the potential impact on procurers in the context of declining bid-discovered prices.

In a notification, the Ministry has now dissolved these central pricing pools due to concerns over power tariff uncertainty.

However, the bids received and letters of award issued under URET will not be impacted. They will remain valid on a standalone basis and can be considered for the signing of PPAs and PSAs. The renewable energy implementing agencies can execute the PSAs/PPAs with the procurers and developers for these bids.

Under URET, any interstate transmission system connected solar and solar-wind hybrid capacity bid after this date will fall under their corresponding pools. The operation of these pools would follow a first-in, first-out approach. The projects receiving their letter of award first will be included and sold within their respective pools.

Mercom had reported how delays in finalizing PSAs and PPAs had created obstacles for developers and policymakers alike.

In July this year, nearly 8 GW of renewable energy capacity comprising solar, wind-solar hybrid, solar with battery energy storage systems, round-the-clock, and firm and dispatchable renewable energy was stranded with the Solar Energy Corporation of India for want of offtakers.

The stranded capacity would be much higher if the capacities unsold with the other three renewable energy bidding agencies – NTPC, NHPC, and SJVN- are considered.