A significant bottleneck has emerged in India’s renewable energy expansion plans, with approximately 45 gigawatts (GW) of transmission connectivity remaining unutilised due to prolonged delays in signing Power Purchase Agreements (PPAs) and Power Sale Agreements (PSAs).
According to a staff paper released by the Central Electricity Regulatory Commission (CERC) in November 2025, around 31.8 GW of connectivity has already been granted to renewable energy generators, with an additional 13.5 GW in the application stage—all awaiting PPA execution.
The delayed agreements span multiple states, with Rajasthan bearing the brunt of the issue at 18.75 GW, followed by Andhra Pradesh (7.11 GW), Karnataka (6.99 GW), and Madhya Pradesh (4.85 GW). Major Renewable Energy Implementing Agencies (REIAs) including SECI, NTPC, NHPC, and SJVNL have issued Letters of Award (LoAs) for these projects, but final PPAs remain unsigned.
Under current regulations, renewable energy developers can secure grid connectivity through an LoA route, where connectivity is granted based on a Letter of Award issued by government agencies. However, the system assumes that PPAs will follow shortly after LoA issuance.
The problem arises because developers typically begin implementing projects only after signing PPAs. When PPA signing is delayed beyond 12 months from LoA issuance, transmission infrastructure either sits idle after commissioning or remains underutilised—a costly outcome for a system ultimately funded by consumers through transmission charges.
While the staff paper doesn’t detail specific causes, the document acknowledges that responsibility for non-signing cannot be placed entirely on renewable energy generators or distribution companies (Discoms). The delays appear to stem from systemic issues in the procurement process, including:
Procurement timeline mismatches between LoA issuance and final contract execution
Changing commercial terms during the negotiation period
Administrative bottlenecks at various approval stages
Financial constraints faced by purchasing entities
The Union Ministry of Power (MoP), through a letter dated September 30, 2025, has acknowledged the issue and formed a committee under Additional Secretaries from MoP and Ministry of New and Renewable Energy (MNRE) to recommend solutions.
The situation creates a double bind for India’s renewable energy ambitions. On one hand, significant transmission capacity is blocked by projects unlikely to materialise in the near term. On the other, new developers ready to commission projects within stipulated timeframes cannot access connectivity due to lack of available evacuation capacity.
“Connectivity is a scarce resource and should be allocated only to committed players who can bring projects to fruition in a timely manner,” the staff paper emphasises.
The corresponding transmission systems are either already implemented or under construction, representing substantial capital investment that isn’t yielding returns due to the absence of connected generation capacity.
CERC staff has proposed a multi-option framework to address the crisis:
Option 1: Allow developers to exit the LoA route without surrendering connectivity, converting to a land-based route with an 18-month commissioning deadline and additional performance guarantees.
Option 2: Permit substitution of the original LoA with a PPA signed under a different LoA, enabling flexibility for developers with multiple projects.
Option 3: Enable full exit from connectivity with encashment of only initial bank guarantees, followed by auctioning the vacated connectivity to the highest bidder willing to commission projects within strict timelines.
REIAs have broadly supported liability-free exit options for developers where LoAs haven’t converted to PPAs within 12 months, along with auction mechanisms for reallocating freed connectivity.
For future connectivity grants, CERC is considering eliminating the LoA route entirely, accepting only signed PPAs as valid documents for connectivity applications. An even more radical proposal suggests moving to a pure auction-based system for all future connectivity grants, ensuring only committed developers with firm implementation timelines can access this scarce resource.
The proposals are currently open for stakeholder comments, with the final framework expected to significantly reshape how renewable energy projects secure grid access in India.
The resolution of this issue is critical for India’s target of 500 GW of non-fossil fuel capacity by 2030, as transmission connectivity remains one of the key enablers—or bottlenecks—for renewable energy deployment.