Government Considers One-Time Relief Package for 45 GW Stalled Renewable Energy Projects

The Ministry of New and Renewable Energy (MNRE) is working on a one-time package aimed at unlocking nearly 45 GW of renewable energy projects that remain stalled due to unsigned power purchase agreements, as per The Moneycontrol report.  

The proposed measures are intended to accelerate project execution and improve the commercial viability of pending capacity. 

Nearly 45 GW Capacity Awaiting Power Agreements 

According to the proposal, power purchase agreements for 44.8 GW of renewable energy capacity tendered by Renewable Energy Implementing Agencies (REIAs) since April 2023 were still pending as of April 2026. 

To address the issue, the ministry has prepared a framework focused on improving participation from power distribution companies while also providing developers with additional flexibility to move projects forward.  

The package is divided into demand-side and supply-side measures designed to resolve bottlenecks affecting project implementation. 

Transmission Incentives and Storage Support Proposed 

One of the key proposals involves a one-time waiver of Inter-State Transmission System (ISTS) charges for projects where power supply agreements or power purchase agreements are signed within 3 months of the package notification.  

An alternative option under consideration includes the existing transmission charge waiver framework along with an additional 25% benefit. 

Industry estimates indicate that ISTS charges can add around ₹0.60 per kilowatt-hour to the delivered cost of electricity.  

By lowering procurement costs, the ministry expects renewable energy contracts to become more attractive for distribution companies. 

The proposal also includes support for battery energy storage systems. States signing agreements for conventional solar projects could receive 2 hours of battery storage support for power supply during non-solar periods.  

The measure is intended to improve operational flexibility and grid management capabilities. 

Grid Connectivity Flexibility Under Consideration 

The ministry has also suggested allowing certain projects originally designed under the inter-state transmission framework to connect to state transmission networks on a one-time basis when the generated electricity is ultimately consumed within the same state. 

This proposal seeks to address concerns from distribution companies that often face higher costs when procuring power through inter-state transmission arrangements despite the electricity being used locally.  

Additional incentives linked to renewable energy consumption targets are also being considered for utilities that execute agreements within the proposed timeframe. 

Options Proposed for Renewable Energy Developers 

On the developer side, the package includes mechanisms to provide greater flexibility in handling project awards.  

Developers may be allowed to exit specific Letter of Award (LoA) arrangements while retaining transmission connectivity rights. Another proposal would permit the replacement of an existing LoA with a power purchase agreement secured under a different award structure. 

The package follows discussions held on 6 May 2026 involving renewable energy developers and senior government officials.  

During the meeting, the need for a dedicated support framework for stranded renewable energy projects was highlighted, leading to the preparation of the current proposal. 

Read More: India Energy Investment Set to Hit Record $170 Billion in 2026 Led by Renewables and Grid Expansion! 

Conclusion 

The proposed relief package aims to revive 44.8 GW of renewable energy capacity awaiting power purchase agreements. Through transmission incentives, battery storage support, grid flexibility and developer-focused measures, the government is seeking to accelerate project execution and strengthen renewable energy deployment across the country.   

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