MNRE Clarifies NOC Exemption For Non-Renewable Power Sale From ESS In FDRE Projects

The Ministry of New and Renewable Energy (MNRE) has issued an important clarification to address a key challenge faced by developers of Firm and Dispatchable Renewable Energy (FDRE) projects. The clarification focuses on the requirement of a No-Objection Certificate (NOC) when selling power from energy storage systems (ESS) before the main renewable energy components become operational.

Under the existing FDRE guidelines, renewable power is defined strictly as electricity generated from sources such as solar, wind, or other renewable resources, either alone or combined with storage. The ministry has reiterated that electricity discharged from a storage system charged using non-renewable sources cannot be classified as renewable energy. This distinction is significant because many FDRE projects are built in phases, with components like solar plants, wind farms, and Battery Energy Storage Systems (BESS) being commissioned at different times.

In several cases, developers complete the installation of a BESS before the associated solar or wind project is ready. During this period, the only available option to operate the storage system is to charge it using electricity from the grid, which may not be renewable. As a result, the power discharged from the BESS is treated as non-renewable and cannot be supplied under the terms of a renewable Power Purchase Agreement (PPA).

This situation had created confusion in the industry. Some agencies had insisted that developers obtain a No-Objection Certificate from intermediary or end procurers before selling such power in the open market or to third parties. This requirement was linked to the “Right of First Refusal” clause in the FDRE bidding guidelines. However, MNRE has clarified that this clause applies only to renewable power generated from commissioned renewable energy assets like solar or wind plants.

The ministry emphasized that obligating procurers to accept non-renewable power from a BESS would not align with the intent of renewable energy contracts and could face regulatory challenges. Therefore, it has now been clearly stated that developers do not need to obtain an NOC when selling electricity from an ESS that has been charged using non-renewable sources, as long as the corresponding renewable project has not yet been commissioned.

This clarification has been approved at the highest level within the ministry and shared with key implementing agencies such as the Solar Energy Corporation of India and NTPC Limited. The decision is expected to remove procedural hurdles and provide greater flexibility to project developers.

By allowing developers to commercially utilize their storage assets without unnecessary administrative approvals, the move is likely to improve project viability and cash flow during the early stages. It also ensures better alignment between policy intent and on-ground implementation, helping to streamline the development of complex renewable energy projects in India.