Centre must push states to comply with renewable purchase obligations, says industry

India aims to achieve 500 GW of non-fossil energy generation capacity by 2030.

Piling unsigned power purchase agreements (PPAs) and power supply agreements (PSAs) has been one of the biggest worries for developers in the renewable energy (RE) sector in 2024, according to at least three leading companies in the sector.

With lower prices of solar and wind energy being discovered with every new project, the developers of old RE projects are finding it difficult to find buyers for their green power, resulting in a bunch of unsigned power purchase and sale agreements.

Vineet Mittal, chairman and founder of Avaada Group, which aims to have a renewable capacity portfolio of 30 GW by 2030, said India currently has unsigned PPAs and PSAs to the tune of 48,000 MW (48 GW). “One of the biggest challenges is that of unsigned PPAs and PSAs, without which all the investments by RE developers would remain only in theory. The Centre must push the states for strict compliance to renewable purchase obligations (RPOs), which would compel discoms to buy green power and thus, sign PPAs,” he said.

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When asked by reporters about a solution to the issue of piling unsigned PPAs and PSAs, Union Minister for New and Renewable Energy Pralhad Joshi said the government has made note of the issue and is working on a way to push states for wider implementation of the same.

For 2024-25, the discoms had to purchase 29.92 percent renewable power from its total power purchased to supply to end-consumers. For 2025-26, this target is set at 33.01 percent. Although there is no compiled data over RPO compliance across discoms in every state and UTs, senior ministry officials said the compliance has been fairly low.

Parag Sharma, founder and chief executive officer (CEO) of O2 Power, an Indian renewable energy platform owned by EQT Infrastructure and Temasek, said apart from RPO compliance as now mandated under the Energy Conservation Act, the Confederation of Indian Industry (CII) has also suggested the Union government for a waiver of inter-state transmission charges PPAs signed before June, 2025.

“We all know that the Ministry of New and Renewable Energy (MNRE) did a great job with the RE implementing agencies to have 50 GW of RE bids in the last financial year. But data shows out of the 48-50 GW of bids, only 8-10 GW of PPAs got converted - the bids happened, the LOAs were given, but only 8-10 GW got converted into signed PPAs. Similar is the story for this year, India must have done 25 GW of bids and only half of that would have got the PPAs signed. This is the biggest concern of our industry at the moment,” Sharma said. He is also the Vice President of CII’s Renewable Energy Committee.

He further said all investments, as a result, only remain on a piece of paper because letters of award (LOAs) don’t get converted to singed PPAs. “One of the most practical suggestions we have given to the Union government is the waiver of inter-state transmission charges for PPAs that are signed before June 2025. This would encourage states to sign PPAs as they would get the incentive of inter-state transmission waiver,” he said.

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RPV Prasad, Managing Director, Envision India, a leading manufacturer of wind turbines in India said despite having a clear line of orders in sight for the near future, execution on ground remains a challenge. “In our company, we manufactured 3.3 GW of wind turbines, delivered almost 2.9 GW, installed is 1.9 GW and of all this, commissioned is only 800 MG. So, almost 2 GW is lying across different customers due to this issue,” he said.

To ensure adequate off-take of renewable power, the Ministry of Power on September 26 conveyed to all state governments that the renewable consumption obligation notified under Energy Conservation Act, 2001, needs to be followed by the obligated entities. It also requested the state governments to take appropriate measures to meet the obligations for consumption of renewable energy as per the specified targets.

However, industry stakeholders said the issue requires more than just advisories issued by the Centre to states for compliance.