MNRE centralises renewable energy bidding under SECI to address PPA backlog and improve procurement efficiency

Introduction

The Ministry of New and Renewable Energy (“MNRE”) has issued directions introducing a significant structural change to India’s renewable energy procurement framework. Under the revised arrangement, the Solar Energy Corporation of India (“SECI”) will function as the sole intermediary procurer for future renewable energy tenders conducted at the central level.

The reform appears intended to address two longstanding concerns within the renewable energy sector:

• the growing backlog of unsigned Power Purchase Agreements (“PPAs”) and Power Sale Agreements (“PSAs”); and
• fragmentation in procurement practices across multiple public sector intermediary procurers.

By consolidating procurement functions under a single agency, the Government aims to improve execution efficiency, standardise procurement practices, and strengthen confidence in India’s renewable energy development pipeline.

Centralisation of the Renewable Energy Bidding Process

Prior to these directions, several Central Public Sector Undertakings (“CPSUs”) including NTPC Limited, NHPC Limited, and SJVN Limited were authorised to conduct competitive bidding processes for renewable energy projects in their capacity as intermediary procurers.

Under the revised framework, the authority to issue fresh renewable energy tenders will vest exclusively with SECI. Existing projects already awarded or under execution through other CPSUs will continue to be implemented under their current arrangements; however, new tenders are expected to be routed solely through SECI going forward.

The rationale for centralisation is primarily administrative and commercial. Procurement conducted through multiple agencies had resulted in varying bidding structures, inconsistent contractual provisions, differing risk allocation frameworks, and non-uniform implementation practices. These inconsistencies often complicated project financing, increased transaction costs, and delayed project execution.

A single procurement platform is therefore expected to promote:

• standardisation of bidding documents;
• consistency in contractual structures;
• greater predictability for developers and investors; and
• improved coordination between procurers, developers, and distribution utilities.

Addressing the PPA and PSA Backlog

One of the principal concerns underlying the MNRE directions is the substantial backlog of PPAs and PSAs that remain unsigned despite issuance of Letters of Award (“LoAs”).

The absence of executed PPAs and PSAs has created significant uncertainty for developers, lenders, and investors, particularly because project financing and financial closure are often contingent upon enforceable long-term offtake arrangements. Delays in execution have therefore adversely affected project timelines, commissioning schedules, and overall investor confidence.

To address this issue, MNRE has directed intermediary procurers to undertake a comprehensive review of awarded projects and categorise them based on their realistic implementation prospects. Procurers are also expected to prioritise execution of pending PPAs and PSAs for viable projects.

Importantly, where projects are assessed as non-viable particularly where developers have failed to initiate essential steps such as grid connectivity applications or project development activities procurers have been authorised to proceed with phased cancellation of LoAs.

This is a notable policy shift. Historically, non-performing awards often remained pending for extended periods, creating artificial inflation within the announced project pipeline while preventing timely reallocation of capacity. The revised framework indicates a greater willingness on the part of the Government to formally terminate stalled projects and re-tender capacity under more commercially viable conditions.

Procurement Discipline and Procedural Transparency

1. Prohibition on Post-Tender Tariff Negotiations

The directions prohibit post-tender tariff negotiations, a practice that had, in certain instances, undermined the integrity and predictability of competitive bidding outcomes.

This measure reinforces the principle of transparent tariff discovery through competitive bidding and may improve investor confidence in procurement stability.

2. Mandatory Pre-Bid Consultations

Intermediary procurers are now required to conduct pre-bid consultations with States and end-procurers prior to issuing tenders.

The objective is to ensure that procurement is aligned with actual demand requirements, including peak demand considerations and long-term procurement planning, rather than based on speculative or unconfirmed demand projections.

3. Advance Buyer Commitments

The revised framework also requires advance commitment from purchasing entities before tenders are floated.

This requirement seeks to reduce the risk of projects being developed without firm offtake arrangements and may help minimise situations where awarded capacity subsequently faces delays due to lack of willing buyers.

4. Regulatory Oversight of the “Green Shoe” Option

The directions further clarify that exercise of the “Green Shoe” option whereby procurers may award capacity beyond the initially tendered quantum if sufficient bids are received, will now require prior approval from the relevant regulatory commission.

This introduces an additional layer of regulatory scrutiny and may help ensure that expansion of procurement capacity remains consistent with demand forecasts, grid planning, and regulatory oversight principles.

Legal and Policy Implications

Institutional Consolidation and Regulatory Oversight

While centralisation may improve efficiency and standardisation, it also reduces the institutional plurality that previously existed among intermediary procurers. Concentrating procurement authority within a single agency places greater operational and governance responsibility on SECI and correspondingly increases the importance of robust regulatory oversight mechanisms.

The success of the framework will therefore depend significantly on SECI’s institutional capacity to manage larger procurement volumes efficiently while maintaining transparency, timely execution, and contractual discipline.

Improved Bankability of Renewable Energy Projects

From a financing perspective, faster execution of PPAs and PSAs may significantly improve project bankability. Lenders and investors have consistently identified uncertainty regarding long-term offtake arrangements as a major project risk within India’s renewable energy sector.

Standardised contractual structures, improved procurement discipline, and reduced execution delays may therefore contribute to:

• easier access to project financing;
• lower transaction costs;
• improved investor confidence; and
• greater predictability in project development timelines.

Demand-Linked Procurement Planning

The move toward demand-anchored procurement where projects are linked to verified buyer commitments before tenders are issued, reflects a more mature and system-oriented procurement strategy.

This approach may help reduce the risk of stranded capacity, over-procurement, and delays arising from mismatches between generation capacity and actual market demand.

Conclusion

The directions issued by the Ministry of New and Renewable Energy represent a significant attempt to address structural inefficiencies that have developed within India’s renewable energy procurement framework over several years.

The issues targeted by the reform including PPA backlogs, fragmented procurement practices, inconsistent contractual frameworks, and delayed execution have long been recognised across the sector. The revised framework seeks to address these concerns through procurement centralisation, enhanced procedural discipline, and stronger alignment between procurement and actual demand.

The effectiveness of the reform, however, will depend on several implementation factors, including:

• SECI’s ability to manage its expanded mandate efficiently;
• timely execution of pending PPAs and PSAs;
• transparent cancellation of non-performing projects; and
• effective regulatory oversight of the revised procurement framework.

Nonetheless, the policy direction is clear. The Government appears focused on bringing greater coherence, predictability, and commercial discipline to India’s renewable energy procurement ecosystem, which may ultimately strengthen the long-term stability and bankability of the clean energy sector.