55 GW Renewable Energy PPAs Remain Unsigned, Await Buyers.

Approximately 55 gigawatts (GW) of renewable energy (RE) capacity awarded between April 2022 and October 2024 remain without power purchase agreements (PPAs), according to a recent analysis by JM Financial. The delays are attributed to a surge in bids, a mismatch between electricity demand and the bid pipeline, and evolving industry dynamics.

JM Financial examined 357 RE projects with a combined capacity of 95 GW awarded during this period, revealing that 224 contracts—accounting for 55 GW of capacity—are still awaiting PPAs, while agreements have been signed for 40 GW. On average, it takes 8–10 months to finalize a PPA.

The sharp increase in bids, from 14 GW in FY22 to over 50 GW in FY24, has strained the market, with supply outpacing demand from distribution companies (Discoms). Additionally, a large pipeline of under-construction projects, totaling 79 GW as of September 2024, and declining costs for technologies like battery energy storage systems (BESS) are influencing Discoms’ reluctance to commit to long-term agreements.

The conversion rate for solar projects into PPAs has plummeted, from 47% in FY24 to just 16% year-to-date in FY25. In contrast, wind energy, though awarded less capacity, has seen higher success in PPA conversions. This shift reflects a growing preference for hybrid and storage-backed solar projects over standalone solar solutions, especially as excess capacity during solar hours dampens vanilla solar’s appeal.

Discoms are also cautious about future demand uncertainty, particularly from their largest revenue-generating group—commercial and industrial consumers—who are increasingly turning to open-access renewable energy options.

To address these challenges, the power ministry has proposed a 15-year PPA model for tariff-based competitive bidding (TBCB) projects, incorporating energy storage systems to improve grid stability and flexibility.

Despite current delays, JM Financial remains optimistic about future PPA signings, noting that the historical conversion rate of awarded bids to signed PPAs has remained consistent at 48–50%. The brokerage expects an acceleration in PPA finalizations as Discoms adapt to evolving demand drivers such as data centers and as developers align with emerging technologies and policy frameworks.

HBL