RE industry flags concerns over CERC's transmission framework, Pg15

Key Highlights:

• CERC proposed granting transmission connectivity to future renewable energy projects only against signed PPAs, instead of LoAs.
• Alternatively, CERC suggested an auction-based mechanism for allocating connectivity, coupled with firm commissioning timelines.
• Private developers and REIAs have raised concerns over the proposed changes, citing potential implications for project execution, tariffs, and market competition.
• Around 31.8 GW of renewable capacity has already been granted connectivity but is yet to secure PPAs, leading to underutilisation of transmission infrastructure.
• At least 42 GW of RE capacity is still without PPAs, causing delays in project awards.

Detailed Insights:

• The current framework under the General Network Access regulations allows renewable projects to secure connectivity through multiple routes, including LoAs or PPAs, partial land acquisition, or bank guarantees.
• Stakeholders cautioned that the proposals could lead to higher tariffs due to dual auctions, concentration of connectivity with financially stronger players, difficulties for intermediary procurers, and limited accommodation for merchant power.
• REIAs like SECI and NHPC opposed the proposal, stating it would make it unfeasible to develop RE projects through REIAs and create uncertainty on project commissioning timelines.
• NSEFI flagged "double-auction risk," stating that the "connectivity premium" paid in an auction would raise the final renewable energy tariff.
• The Indian Wind Turbine Manufacturing Association maintained that shifting to a PPA-only eligibility criterion risks excluding emerging business models like merchant power and captive projects.
• Private developers raised concerns that auctions do little to resolve persistent delays in transmission planning, augmentation, and commissioning, and could lead to cost escalation.

Key Concepts Involved:

• Power Purchase Agreement (PPA): A contract between two parties, where one sells electricity and the other purchases it.
• Letter of Award (LoA): An official document confirming the award of a project or allocation of capacity to a successful bidder.
• Renewable Energy Implementing Agencies (REIAs): Entities like SECI and NTPC that act as intermediary procurers of renewable energy.