URET Mechanism – dissolution of ‘Solar power central Pool’ and ‘solar-wind Hybrid central Pool’- reg. – EQ

Summary:

The Ministry of Power has officially withdrawn its previous directive (OM No. 13/05/2023-RCM/NRE dated 14th February 2024) that established the Uniform Renewable Energy Tariff (URET) mechanism, which had led to the formation of the ‘Solar Power Central Pool’ and ‘Solar-Wind Hybrid Central Pool’. These pools were initiated to stabilize tariff structures and protect power procurers from tariff fluctuations, especially amid declining bid-discovered prices. The URET mechanism was set to be in effect for three years, from 15th February 2024 to 14th February 2027, in accordance with the Electricity (Amendment) Rules, 2022.

However, the Ministry received multiple representations from Renewable Energy Implementing Agencies (REIAs) and renewable energy developers, raising concerns over the mechanism. The main issue cited was the reluctance of power procurers to sign Power Sale Agreements (PSAs) due to uncertainties associated with the fixed tariff structure over a three-year period. This hesitation has resulted in significant volumes of renewable energy capacity remaining stranded or pending PSA signings.

In light of these developments, the Ministry has decided to revoke the earlier Office Memorandum, and thereby dissolve both the ‘Solar Power Central Pool’ and the ‘Solar-Wind Hybrid Central Pool’. This move is intended to accelerate the deployment of renewable energy projects by reducing contractual uncertainties and enabling more flexible tariff negotiations between developers and procurers.

Importantly, the Ministry has clarified that bids already received and Letters of Award (LoAs) issued under the previous mechanism will remain valid on a standalone basis. These may still be used for the signing of PSAs/PPAs, but without being part of the now-defunct central pools. REIAs are directed to proceed with executing these agreements directly with the concerned parties.

This decision has been issued with the approval of the Competent Authority and has been communicated to key stakeholders, including senior officials in the Ministry of New & Renewable Energy (MNRE), CMDs of major public sector enterprises (such as NTPC, NHPC, SJVN, SECI), State Power Departments, regulatory commissions (CERC, SERCs), and relevant industry associations.

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