MNRE Waives NOC Requirement for Non-RE Charged ESS Power Sales
Ministry of New and Renewable Energy has clarified that developers can sell electricity from energy storage systems charged by non-RE power in the open market without NOC requirements until the associated renewable project is commissioned, easing regulatory friction in FDRE projects.
April 13, 2026. By Mrinmoy Dey
The clarification follows representations from industry associations seeking regulatory certainty on the treatment of ESS operations in hybrid and FDRE projects. MNRE, after examining provisions under the FDRE Standard Bidding Guidelines (SBGs), reaffirmed that energy stored using non-RE sources does not qualify as renewable power.
Crucially, the ministry emphasised that ESS is classified as a storage component rather than a generating source. As a result, power discharged from storage systems – if charged from conventional grid electricity – falls outside the definition of RE power and cannot be supplied under power purchase agreements (PPAs) tied to renewable energy obligations.
The MNRE memorandum also clarifies the applicability of the ‘Right of First Refusal’ clause under FDRE PPAs. According to MNRE, this provision applies only to electricity generated from commissioned renewable assets such as solar or wind. It does not extend to power discharged from ESS when charged using non-renewable sources, particularly in cases where the primary RE component is yet to be operational.
The issue becomes especially relevant in hybrid projects where battery energy storage systems (BESS) are often commissioned ahead of solar or wind assets. In such scenarios, developers may rely on grid power to charge storage systems temporarily. MNRE noted that requiring NOCs for selling such non-RE power creates regulatory inconsistencies, as procurers would effectively be purchasing electricity that does not meet RE criteria under existing PPAs – raising potential compliance risks.
“The provisions of Right of First Refusal or NOC from intermediary procurer/end procurer/buying entity, as contained in FDRE PPAs, trigger only after at least one of the RE generating component (e.g., solar/wind) is commissioned,” stated MNRE.
By removing the NOC requirement in these cases, MNRE has effectively streamlined early-stage project operations and provided flexibility to developers to monetise storage assets during the interim phase before RE generation begins.
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