The Ministry of New and Renewable Energy (MNRE) has prepared a draft one-time relief package for renewable energy projects that have received Letters of Award (LOAs) but have yet to sign power purchase agreements (PPAs).

The package has been sent to the Ministry of Power for consideration.

The draft follows a meeting with renewable energy developers held on May 6, 2026, under the chairmanship of the Advisor to the Prime Minister. The Secretaries of the Ministry of Power and MNRE were also present at the meeting.

The meeting discussed renewable energy projects aggregating to around 45 GW, for which LoAs have been issued but PPAs have yet to be signed. The Advisor to the Prime Minister suggested that MNRE prepare a one-time relief package for such stranded renewable energy projects.

The proposed relief package is grouped into demand-side facilitation measures aimed at making power sale agreement (PSA) execution more attractive to the distribution companies (DISCOMs) and end-procurers, and supply-side resolution options for developers to resolve their LoA status.

The measures have been proposed without direct fiscal or subsidy support from the Union government.

Demand-side measures

The draft proposes extending the interstate transmission services (ISTS) charge waiver to all pending projects for which PSAs or PPAs are signed within three months of the date the decision is conveyed.

The draft lists two options. The first proposes a 100% ISTS waiver for PPAs signed within the cut-off date. The second proposes an ISTS waiver as per regulations, plus an additional 25% waiver.

If PSAs or PPAs are not signed within the stipulated timeframe, the projects may thereafter be governed by the applicable ISTS charge framework, including the phased ISTS waiver for projects commissioned up to June 30, 2028.

For projects delayed due to non-readiness of the transmission system, the draft proposes that the project may remain eligible for the ISTS waiver based on the originally scheduled commissioning date.

The draft also proposes that states opting to sign PPAs for vanilla solar projects may be provided two hours of battery energy storage system (BESS) support with Section 62 tariffs for non-solar hours.

The measure is intended to address DISCOM concerns about vanilla solar projects’ ability to meet operational and grid management requirements. The draft says this can be done without changing the renewable energy project configuration or tariff.

Projects tendered by renewable energy implementing agencies (REIAs) under the ISTS-connected framework may be permitted, on a one-time basis, to connect to the state transmission utility (STU) network where power is ultimately supplied within the same state, irrespective of tender conditions.

The REIAs would continue to collect trading margin, subject to the payment security mechanism.

The draft says DISCOMs may be reluctant to procure power through the ISTS route due to additional transmission charges and system costs, particularly where the power is intended for consumption within the same state. It says allowing STU connectivity can reduce landed power cost, improve transmission utilization efficiency, and make pending renewable energy procurement more commercially attractive for states.

The draft package proposes deemed compliance with the renewable purchase obligation (RPO) or renewable consumption obligation (RCO) for DISCOMs that sign PSAs within three months of the date the decision is conveyed. Under this measure, DISCOMs may be made commensurately eligible for deemed RPO or RCO compliance from the date of signing of the PPA.

The draft further proposes adopting a deemed tariff within 45 days of application if no action is taken. It says that delays or denials of tariff approval by state electricity regulatory commissions have frequently delayed PSA execution.

The demand-side facilitation measures are proposed to have a 90-day closure window, with a possible 30-day extension for 178 identified cases. After the window closes, the Central Electricity Regulatory Commission’s options under its draft order will apply.

Developer resolution options

The draft proposes mandatory resolution options for developers holding stranded LoAs.

Developers will be required to choose one of three options within a stipulated period. If no option is selected, Option III will be treated as the default.

Under Option I, developers may cancel the LoA without surrendering connectivity. They may exit the LoA route by applying to the Central Transmission Utility.

Developers choosing this option must submit a no-objection certificate from the concerned REIA certifying non-signing of the PPA, along with land papers or a performance bank guarantee of ₹1 million (~$10,497)/MW.

Under Option II, developers may continue with milestone extensions against milestone extension charges.

For land document submission, the maximum extension allowed is three months. The base charge is ₹1,500 (~$15.75)/MW/day for the first month. It rises to ₹1,650 (~$17.32)/MW/day in the second month and ₹1,800 (~$18.89)/MW/day in the third month. Developers must furnish land documents for at least 20% of the required land.

For financial closure, the maximum allowed extension is 6 months. The base charge is ₹1,500 (~$15.75)/MW/day for the first three months. It rises to ₹1,650 (~$17.32)/MW/day in the fourth month, ₹1,800 (~$18.89)/MW/day in the fifth month, and ₹1,950 (~$20.47)/MW/day in the sixth month.

Eligibility for a financial closure extension requires 50% of land documents under the Land bank guarantee route or 25% of land documents under the LoA or PPA route.

For the commercial operation date (COD) extension, the maximum extension allowed is 12 months. The base charge is ₹3,000 (~$31.49)/MW/day for the first six months. It rises by 10% each month up to the ninth month, reaching ₹3,900 (~$40.94)/MW/day. For months 10 to 12, the charge increases to ₹6,000 (~$62.98)/MW/day.

Eligibility for COD extension requires 100% land documents under the Land BG route or 50% land documents under the LoA or PPA route, along with proof of financial closure and EPC contract details.

Under Option III, developers may make a penalty-free exit by surrendering connectivity and canceling the LoA issued by the REIA.

Developers choosing this route may surrender connectivity and receive Conn-BG1, Conn-BG2, and Conn-BG3 in return. They must apply to CTUIL to surrender connectivity.

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