India’s clean energy pipeline under stress: Understanding the 42 GW challenge
India set an annual target of issuing 50 GW of renewable energy tenders to accelerate capacity addition and strengthen the country’s long-term decarbonisation pathway. The target has been met on paper, with more than 93 GW tendered since FY2024. This surge was intended to build a strong project pipeline, align with future demand, and ensure competitive tariff discovery through high market participation.
Despite issuing tenders at unprecedented scale, MNRE’s latest notification revealed deeper structural challenges. Between April 2023 and June 2025, nearly 11,400 MW of tenders were cancelled due to undersubscription, high tariffs, or procurers backing out. Now, a much larger issue has emerged: around 42 GW (as of September 2025) of tendered capacity remains without buyers (unsigned Power Supply Agreements (PSA)), creating uncertainty around the actual realisable pipeline. These developments show that while India has excelled in issuing tenders, execution and offtake have not kept pace.
Since April 2023, PSAs have been signed for 24,928 MW, showing continued progress in project alignment. The Government has directed Renewable Energy Implementing Agencies (REIAs) to review all unsigned Letter of Awards (LoAs) based on tariff viability, project configuration, and connectivity timelines, cancelling only those with minimal prospects of execution and only after all alternatives are exhausted.
Figure: Tendered vs Capacity without PPA/PSA vs Cancelled Capacity (Apr 2023 – Sep 2025
Note:
- PPA stands for Power Purchase Agreement; PSA stands for Power Sale Agreement
- Tendered capacity is total project capacity put up by REIAs from April 2023 onwards
- PSA Unsigned is capacity for which power purchase/ sale agreements remain unsigned
- Cancelled capacity is already cancelled projects until Sep 2025
Source: Ministry of Power, JMK Research
The backlog is primarily the result of tendering volumes expanding faster than actual demand and transmission readiness, compounded by capacity hoarding that saw developers securing Inter-State Transmission System (ISTS) connectivity without meaningful project progress and later attempting to shift or trade these rights, creating congestion in critical corridors. In several high-demand zones, speculative hoarding of transmission capacity by entities has inflated connectivity costs and delayed access for genuinely viable projects. These issues are further exacerbated by structural and procedural bottlenecks such as Right of Way (RoW) disputes, slow land acquisition, equipment procurement restrictions, and multi-agency approval requirements.
At the same time, PSA signings have slowed due to offtakers’ expectations of continuously falling renewable tariffs, along with delays in obtaining state-level regulatory approvals for tariff adoption. Developers also note that the pressure to meet the annual 50 GW tendering target pushes Renewable Energy Implementing Agencies (REIAs) to issue bids and finalise auctions before fully securing demand or planning for offtake, contributing to the growing volume of unsigned PSAs.
Impact of Potential Cancellations
If cancellations materialise, the following effects will cascade across the renewable energy ecosystem:
| Stakeholder | Impact |
|---|---|
| Developers | Reduced visibility of execution pipelines, sunk bid-preparation costs, and reduced willingness to participate in future tenders. |
| Equipment Manufacturers | Lower order volumes and disruptions in manufacturing, delivery forecasts, and project planning cycles. |
| Financiers | Stricter tariff viability checks, tighter lending norms, and higher risk premiums due to increased project-level uncertainty. |
| Investors | Moderation in private equity and infrastructure fund interest; possible short-term slowdown in Foreign Direct Investments (FDI) inflows due to concerns regarding procurement stability and PSA security. |
| Transmission Agencies | Need for realignment of corridor planning and revalidation of ISTS connectivity granted to stalled projects. |
| REIAs & Government | Pressure to revisit tendering strategies, strengthen demand aggregation processes, and ensure policy certainty to restore sector confidence. |
The government has also clarified that fears of large, stranded investments are unfounded, as major capital spending begins only after PPA execution, while early-stage investments such as land or connectivity can be repurposed for other projects. The government has also confirmed that no blanket cancellations are planned, with any withdrawal of awarded capacity treated only as a last-resort option. REIAs have been asked to assess each project individually based on PSA prospects, tariff viability, transmission readiness, and bid structure, cancelling only those with minimal execution potential. Agencies are also expected to explore restructuring, re-bidding, or consolidated demand aggregation before taking such decisions.
To prevent similar challenges in future tender cycles, a more disciplined and integrated approach is essential. Tendering must be demand-driven, based on confirmed aggregation from Distribution Companies (DISCOMs) and large consumers, ensuring predictable offtake. Viability checks prior to issuing LoAs would ensure sustainable tariffs and enforcing Renewable Consumption Obligation (RCO) and Renewable Energy Certificate (REC) obligations would anchor steady procurement demand. Ultimately, coordinated planning across Renewable Energy (RE), storage, and transmission infrastructure is crucial to avoid stranded capacities and create a long-term, execution-focused renewable energy expansion pathway.