Govt Reviews 44 GW Unsigned PSAs, Denies Talk Of Blanket Cancellations

The Indian government has recently issued fresh directions on unsigned renewable energy Power Purchase Agreements (PPAs), a matter that has started to affect the country’s 90 GW strong project pipeline.

Over the past decade, India’s renewable energy capacity — excluding large hydro — has grown from around 35 GW in 2014 to more than 197 GW. As of September 30, 2025, Renewable Energy Implementing Agencies (REIAs) have issued Letters of Award (LoAs) for 43,942 MW of capacity linked to Power Sale Agreements (PSAs), but many of these remain unsigned by end procurers.

This reflects both the scale of recent bidding activity and the evolving nature of demand aggregation and procurement timelines. Since April 2023, REIAs have successfully signed PSAs for 24,928 MW of capacity, showing continued progress in contract execution and market alignment. However, for the next phase of growth, the government’s focus has shifted beyond capacity addition — toward ensuring that renewable power is absorbed efficiently through grid integration, storage deployment, and market reforms.

The sector is, therefore, at an inflection point — transitioning from rapid capacity expansion to deeper structural integration. This marks the growing maturity of India’s renewable market and the increasing complexity of sustaining long-term growth.

No Blanket Cancellations on Renewable Energy Bids

The government, together with key stakeholders, is exploring mechanisms to optimize transmission capacity and improve the contracting framework. It is examining the feasibility of signing PPAs and PSAs for certain awarded capacities and reviewing provisions such as the green shoe option. Importantly, no blanket cancellations of bids are being planned.

Authorities are closely monitoring cases where REIAs have issued LoAs, but PSAs with DISCOMs or end procurers have yet to be finalized. Some DISCOMs have expressed hesitation in signing PSAs for projects where the likely start date of connectivity for successful bidders lies far in the future.

In response, the Ministry of New and Renewable Energy (MNRE) has advised REIAs to carry out due diligence — reviewing and categorizing each case based on the likelihood of securing PSAs with end procurers. This assessment will consider factors such as the renewable configuration under the bid, the discovered tariff, and the expected timeline for connectivity. Only those LoAs with minimal or no prospects of PSA execution may be considered for cancellation, and even then, only on a case-by-case basis.

Even in such cases, cancellations are expected to be phased and undertaken only after all feasible options for executing PSAs and PPAs have been fully explored.

Impact of PSA and PPA Cancellations

Concerns that renewable investments may be stranded because of potential LoA cancellations are unfounded, according to the ministry. Major investments in renewable projects typically begin only after the signing of a PPA. Any initial spending by developers — such as for land or connectivity — can usually be repurposed for other ongoing or future projects within their portfolio.

Government’s Proactive Measures

To facilitate PSA execution, the government has rolled out several proactive steps. These include:

• Urging states to comply with the Renewable Consumption Obligation (RCO) under the Energy Conservation Act.

• Advising REIAs to aggregate demand from DISCOMs and large consumers before issuing new tenders.

• Conducting regional workshops with major renewable energy–procuring states to address implementation challenges and accelerate PSA signing.

• Amending the Standard Bidding Guidelines for solar, wind, hybrid, and Firm & Dispatchable Renewable Energy (FDRE) projects to allow cancellation of LoAs that remain unexecuted for over 12 months.

A Changing Market Focus

The government’s broader goal remains optimizing renewable energy costs and the associated transmission infrastructure. With the declining cost of solar-plus-storage and dispatchable renewable power, distribution companies and end procurers are showing greater interest in these firm, round-the-clock solutions.

Demand for plain solar power has decreased, while solar-plus-storage configurations are proving more economically viable than wind-solar hybrid projects — particularly because of their ability to supply power during peak demand hours. As a result, REIAs are being encouraged to move toward tenders that integrate storage, supply power during peak hours, or deliver firm and dispatchable renewable energy (FDRE).

Scaled Transmission Infrastructure

Another major focus area is transmission. The ₹2.4 lakh crore investment plan for transmission linked to 500 GW of renewable energy, along with recent amendments to the General Network Access (GNA) regulations, aims to unlock stranded capacity and enable dynamic corridor sharing. These reforms are expected to ease congestion and improve grid access in renewable-rich states.

India added around 29 GW of renewable capacity (excluding large hydro) in the last financial year, and another 25 GW in the first half of FY 2025–26. This momentum is being driven not just by central and state-led bids but also by rising demand from commercial and industrial consumers. Investor interest remains strong, with a growing shift toward integrated, storage-backed renewable portfolios.