India ends central pricing system for renewable energy, dissolves solar and hybrid pools

India has scrapped its central pricing system for renewable energy projects after developers warned it was slowing down power deals.

In an order issued on August 1, 2025, the Union Ministry of Power announced the dissolution of the Solar Energy Central Pool and the Solar-Wind Hybrid Central Pool. These pools, set up in February 2024, were designed to standardise tariffs for clean energy projects for three years under the Uniform Renewable Energy Tariff (URET) mechanism.

A large amount of renewable energy capacity is waiting for PSA signing and, in order to accelerate deployment, it has been decided that the order related to the implementation of the URET mechanism issued on February 14, 2024 is withdrawn, the ministry said in a statement. Along with this, the Solar Power Central Pool and Solar-Wind Hybrid Central Pool are dissolved with immediate effect.

The URET scheme was intended to shield buyers from price volatility. But developers and government renewable energy agencies said buyers were reluctant to sign power sale agreements (PSAs) because of uncertainty over tariffs fixed for three years.

A PSA is usually between SECI and the final buyer, typically a state discom or another entity. In effect, SECI first signs a PPA to buy power from the developer and then a PSA to sell it to the states or other buyers, ensuring a guaranteed supply and payment over the contract period.

India has a large pipeline of renewable projects awaiting PSAs and the ministry said the withdrawal of the order was aimed at preventing further delays. Stranded renewable capacity — projects approved but not yet commissioned — has more than doubled in the past nine months, due largely to incomplete transmission infrastructure and legal or regulatory hold-ups.

While the central pools have been scrapped, bids already received and letters of award issued under the scheme will remain valid. PSAs and power purchase agreements (PPA) can still be signed on the basis of these bids.

The URET mechanism, implemented from February 15, 2024 in compliance with the Electricity (Amendment) Rules, 2022, was initially meant to run until 14 February 2027. It aimed to protect buyers from the effects of falling auction prices. However, renewable energy agencies and developers repeatedly raised concerns that the scheme was discouraging buyers from committing to PSAs.

Under the current system, a PPA is a contract between a power producer, such as a solar project developer and a buyer like the Solar Energy Corporation of India (SECI) or a state distribution company (discom)  specifying how much electricity will be supplied, at what price and for how long.