MNRE Clarification on ESS Power Sales: No NOC Required for Merchant Sale Prior to RE Commissioning

The Ministry of New and Renewable Energy (MNRE) issued an office memorandum dated April 11, 2026, offering a regulatory clarification regarding the sale of electricity from Energy Storage Systems (ESS). The directive establishes that developers do not require a No-Objection Certificate (NOC) from intermediary or end procurers to sell power on the open market when that energy is sourced from non-renewable power and the associated renewable energy (RE) project remains uncommissioned. This exemption facilitates the immediate monetization of storage assets under the Firm and Dispatchable Renewable Energy (FDRE) framework.

Context: Addressing Staggered Commissioning Challenges

The clarification follows representations from renewable energy industry associations regarding the implementation of the FDRE framework. A primary operational challenge identified is the staggered commissioning of project components. In current market conditions, Battery Energy Storage Systems (BESS) are frequently completed and ready for grid injection before the solar or wind generating assets reach the commissioning stage.

In these instances, developers often utilize grid power to charge the storage assets. Previous regulatory ambiguity led some agencies to demand an NOC from procurers before allowing the sale of this energy. The MNRE memorandum resolves this by permitting developers to sell grid-charged power through merchant or third-party routes, ensuring that storage infrastructure can be utilized for grid balancing as soon as it is connected, without administrative delays linked to the primary Power Purchase Agreement (PPA).

Technical Distinction: RE Power vs. Non-RE Charged Storage

The MNRE arrived at this conclusion by analyzing the definitions provided in the FDRE Standard Bidding Guidelines (SBGs). Under Para 2.2(b), “RE Power” is defined as energy from solar, wind, or hybrid systems, including combinations with ESS. However, the ministry explicitly notes that ESS is a “storage component and not a RE generating component.”

Consequently, power discharged from an ESS that was charged via the grid does not qualify as renewable energy and falls outside the supply obligations of a renewable PPA. The following table summarizes the eligibility of power based on its source:

Legal Framework: The “Right of First Refusal” Boundary

The regulatory logic of the memorandum is rooted in the interpretation of Para 14.5 of the FDRE SBGs, specifically following the amendment dated November 17, 2023, which governs the “Early Commencement of Supply of Power.” This clause provides a “Right of First Refusal” (RoFR) to procurers, granting them priority in purchasing power if project components are commissioned ahead of the scheduled date.

The MNRE clarified that this RoFR applies exclusively to RE power generated from commissioned solar or wind assets. It does not extend to non-RE discharge from a storage system charged via the grid. The ministry noted that requiring an NOC for non-RE power would create a “regulatory inconsistency.” If a procurer were to exercise a right over this power, they would be acquiring energy that does not meet Renewable Purchase Obligations (RPO), a transaction that would fail regulatory scrutiny. Therefore, the NOC and RoFR requirements are only triggered once at least one RE generating component is commissioned.

Regulatory Impact and Implementation

The memorandum, announced publicly on April 13, 2026, applies to all existing and future bids under the FDRE framework. The MNRE has circulated the directive to the following entities:

Primary Implementing Agencies:

• Solar Energy Corporation of India Limited (SECI)
• NTPC Limited
• NHPC Limited
• SJVN Limited
• Grid Controller of India Limited

Entities Marked for Information:

• Ministry of Power (MoP)
• Central Electricity Authority (CEA)
• Central Transmission Utility of India Limited (CTUIL)

This waiver provides developers with the legal certainty required to monetize BESS assets through power exchanges or bilateral arrangements immediately upon grid connection. By removing the need for NOC negotiations, the MNRE aims to improve project cash flow and ensure that early-stage storage assets contribute to grid stability during the construction phase of the primary renewable components.