Govt Scraps Uniform RE Tariff Scheme, Citing PSA Hurdles, Tariff Uncertainty

The Ministry of Power has decided to discontinue the Uniform Renewable Energy Tariff (URET) scheme, which was introduced on October 25, 2023.

In 2023, the then Union Minister for New and Renewable Energy and Power, R.K. Singh, had stated that the government was yet to implement the URET mechanism. While the Ministry of Power had issued the procedure for implementing URET on October 25, 2023, the actual implementation had not commenced, and no assessment had been undertaken regarding potential cost escalation due to the scheme.

By 2025, Renewable Energy Implementing Agencies (REIAs) and developers raised concerns that power procurers were reluctant to sign Power Sale Agreements (PSAs) under the URET framework, citing tariff uncertainty over the proposed three-year duration.

As part of the URET mechanism, the Ministry had also announced the launch of the 'Solar Power Central Pool' and the 'Solar-Wind Hybrid Central Pool', effective February 15, 2024, for a three-year period ending February 14, 2027. These central pools were aimed at mitigating challenges arising from falling bid-discovered tariffs and the resulting risks for power procurers.

To accelerate renewable energy deployment and address delays in PSA signings for projects in the pipeline, the Ministry has now withdrawn the Office Memorandum dated February 14, 2025, which had formalised the implementation of URET and the central pools.

Consequently, both the Solar Power Central Pool and the Solar-Wind Hybrid Central Pool stand dissolved. However, bids already submitted and Letters of Award (LoAs) issued under the URET scheme will remain valid on a standalone basis. Renewable Energy Implementing Agencies may proceed with signing Power Purchase Agreements (PPAs) or PSAs with the respective developers and procurers.