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Ministry of Power Discontinues Uniform Renewable Energy Tariff Mechanism Amid Offtake Delays
Aug 07, 2025
The Ministry of Power has officially scrapped the Uniform Renewable Energy Tariff (URET) mechanism in response to persistent challenges faced by renewable energy implementing agencies and developers, particularly around delays in signing power purchase agreements (PPAs). The decision comes amid a backlog of renewable energy capacity—estimated at over 8 GW with the Solar Energy Corporation of India (SECI) alone—awaiting power sale agreements (PSAs) due to buyers’ reluctance linked to tariff uncertainties.
Launched in February 2024, the URET mechanism introduced centralized tariff pools for "Solar Power" and "Solar-Wind Hybrid" projects, intending to stabilize pricing and mitigate the impact of falling tariffs. These pools were to operate for three years, till February 2027, following a first-in, first-out model. However, despite its intent, the mechanism created hesitation among power procurers due to uncertainty over the final power cost, thereby stalling project execution.
In its latest notification, the Ministry has dissolved the URET central pricing pools. While future bids will no longer fall under URET, the Ministry has clarified that existing bids and Letters of Award (LoAs) already issued under the scheme will remain valid. These projects can still proceed with signing PPAs and PSAs on a standalone basis.
The Ministry emphasized that this move is designed to fast-track renewable energy deployment and provide greater clarity to both procurers and developers. It also affects bidding conducted by other major renewable energy implementing agencies including NTPC, NHPC, and SJVN, where unsold capacities are also mounting.
By removing the URET mechanism, the government aims to restore confidence in the PPA/PSA process and ensure faster capacity addition in the renewable energy sector—crucial for meeting India’s ambitious green energy targets.