Renewable Agencies Propose Auction Mechanism for ISTS-Connected Capacities Without PPAs – EQ
In Short : Renewable energy implementing agencies have suggested introducing an auction mechanism for interstate transmission system (ISTS)-connected renewable capacities that currently lack tied-up power purchase agreements (PPAs). The proposal aims to ensure faster capacity deployment, reduce stranded assets, and create a more flexible market for green power. Allowing such projects to be auctioned without pre-secured PPAs can accelerate renewable additions, improve grid utilization, and offer developers more opportunities to sell power through market-based instruments or future contracts.
In Detail : Renewable implementing agencies are pushing for a more flexible framework allowing auction of ISTS-connected renewable capacities even when PPAs are not signed in advance. They argue that the existing model, which requires binding PPAs before project development, slows down capacity growth and restricts market innovation.
The proposed approach aligns with evolving market trends where a larger share of renewable power is traded through exchanges, green markets, and bilateral contracts instead of traditional long-term PPAs. Agencies believe that enabling capacity auctions without fixed offtake commitments will allow projects to be commissioned more quickly.
Developers would also benefit from reduced uncertainty, as they can explore multiple revenue avenues such as term-ahead markets, green day-ahead markets, and corporate PPAs. This market-driven structure could encourage more participation, particularly from private buyers looking for clean energy solutions.
The suggestion is also aimed at avoiding underutilization of ISTS infrastructure, which is being expanded at significant cost. Allowing capacity development without prior PPAs would ensure timely use of these transmission assets and prevent delays in renewable integration.
Agencies further highlight that such a mechanism would complement India’s ambitious renewable energy targets, enabling faster addition of solar and wind capacity to meet growing demand. It would also create a more competitive price discovery process for renewable energy.
Additionally, this proposal supports the shift toward a diversified market model where both long-term contracts and short-term trading coexist, offering greater flexibility to developers and consumers.
Overall, the recommended auction system for untied ISTS capacities is expected to improve renewable deployment efficiency, reduce bottlenecks, and accelerate India’s transition to a more dynamic, market-driven clean energy ecosystem.
