The Ministry of Power has decided to withdraw its earlier order regarding the implementation of the Uniform Renewable Energy Tariff (URET) mechanism. This decision also includes the dissolution of the ‘Solar Power Central Pool’ and the ‘Solar-Wind Hybrid Central Pool’ that were introduced to manage tariff concerns due to falling bid prices in renewable energy auctions.
In compliance with the Electricity (Amendment) Rules, 2022, which were notified on 29th December 2022, the Ministry had earlier announced the implementation of the URET mechanism. Through an Office Memorandum dated 14th February 2024, it was informed that the two central pools would become operational from 15th February 2024 for three years, up to 14th February 2027.
The purpose of these pools was to balance the financial impact on electricity procurers caused by the declining prices discovered through competitive bidding. However, the mechanism faced resistance from renewable energy developers and Renewable Energy Implementing Agencies (REIAs). They raised concerns that procurers were hesitant to sign Power Sale Agreements (PSAs) under the URET due to uncertainty in tariffs over the three years.
Considering the large volume of renewable energy capacity that was waiting for PSA signing and to avoid further delays in project execution, the Ministry of Power has decided to withdraw the earlier order. With this decision, both the ‘Solar Power Central Pool’ and the ‘Solar-Wind Hybrid Central Pool’ stand dissolved.
Despite the withdrawal, bids that were already received and Letters of Award (LoAs) that were issued under the URET mechanism will continue to remain valid. These may still be used to sign Power Purchase Agreements (PPAs) or PSAs. Renewable Energy Implementing Agencies are now allowed to proceed with executing agreements directly with procurers or developers based on these bids. This decision was made with the approval of the competent authority.
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