The Ministry of New and Renewable Energy (MNRE) has clarified that a no-objection certificate (NOC) would not be required for the sale of power from an energy storage system when it is charged using non-renewable sources and sold through merchant or third-party arrangements, provided that the corresponding renewable energy component has not yet been commissioned.

The requirement for an NOC applies only after at least one renewable energy-generating component of the project is operational.

In a memorandum, the MNRE analyzed the matter in accordance with the Guidelines for the Bidding Process for the Procurement of Firm and Dispatchable Renewable Energy (FDRE).

The clarification was issued in response to industry representations seeking guidance on whether an NOC is required when an energy storage system is charged with non-renewable power and the stored energy is sold in a merchant or third-party market.

The MNRE emphasized that renewable power includes electricity generated from sources such as solar, wind, or hybrid systems, potentially combined with storage. However, it clearly states that energy discharged from an energy storage system charged with non-renewable energy sources does not qualify as renewable energy.

It also clarified provisions related to early commissioning, under which a developer can supply power from a commissioned renewable energy component outside the power purchase agreement (PPA) framework, subject to offering it first to procurers.

The developer will have to give 15 days’ advance notice to both the end procurers and the intermediary procurer regarding the advance commissioning of full or partial capacity. The end procurer and intermediary procurer should give acceptance for availing such power within 15 days from the date of service of notice. If neither the end procurer nor the intermediary procurer accepts the purchase of power within the stipulated period, the developer can sell it on power exchanges or through bilateral arrangements.

These provisions, however, apply only to actual renewable energy generation, not to stored energy derived from non-renewable sources.

Consequently, rights such as the Right of First Refusal, which allow procurers to accept or reject early supply of renewable power, apply only to power generated from renewable sources, not to discharges from energy storage systems.

The memorandum also addresses a scenario in FDRE projects where the battery storage system may be commissioned before the solar or wind generation components. In such cases, since renewable generation is not yet available, the energy storage system may need to be charged from the grid using non-renewable power. The energy discharged from the energy storage system in this situation does not qualify for supply under the PPA and can only be sold in the open market.

Requiring an NOC from procurers in such cases would create a regulatory inconsistency, as procurers would be approving power that does not meet the definition of renewable energy under the contract.

Recently, MNRE reiterated that renewable energy implementing agencies (REIAs) cannot include a greenshoe option in their tenders unless they obtain prior approval from the appropriate electricity regulatory commission.

Earlier, MNRE designated the Solar Energy Corporation of India as the sole REIA for issuing renewable energy procurement bids as an intermediary procurer.

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