Dissolution of Solar Power and Solar-Wind Hybrid Central Pools under the Uniform Renewable Energy Tariff (URET) Mechanism

Introduction

The Ministry of Power, Government of India, has recently issued an Office Memorandum dated 1st August 2025 concerning the Uniform Renewable Energy Tariff (URET) Mechanism. This update addresses the dissolution of the Solar Power Central Pool and the Solar-Wind Hybrid Central Pool, which were introduced to manage tariff fluctuations under the URET framework.

Explanation

The first URET mechanism was communicated with the Electricity (Amendment) Rules, 2022. In the interests of capping tariff exposures of power procurers, the Ministry has operationalised the two central pools – the Solar Power Central Pool and the Solar-Wind Hybrid Central Pool – from 15th February 2024 for a period of three years, up to 14th February 2027. In practice, however, procurers and developers, faced with the slowness of URET PSAs renewals, procurers and developers, faced with the slowness of URET PSAs renewals and the buyers, faced with the slowness of URET, struggled to overcome the slowness of the URET. This led to PSAs being signed later than expected, with the market having more than enough potential renewable energy supplied.

In response, the Ministry of Power has now withdrawn its earlier notification dated 14th February 2024, thereby dissolving both central pools with immediate effect. Importantly, while the pools are dissolved, bids already received and Letters of Award (LoAs) issued will remain valid on a standalone basis, enabling REIAs to proceed with signing Power Purchase Agreements (PPAs)/PSAs directly with procurers and developers.

Conclusion

Under the URET policy, the decision is the first step at removing policy barriers that slow the rate of deployment of renewable energy resources. The decision is also intended to establish a ‘Gold-Standard’ agreement on the terms of more rapid capacity PPAs/PSAs to enable faster addition of capacity, more orderly terms to developers and purchasers of capacity, and clearer terms to faster capacity addition. Various Stakeholders including State governments, regulatory commissions, and industry associations, have been duly notified, which indicates the intended policy of the government to simplify the procurement of renewable energy, which should increase confidence of investors.