The Central Electricity Regulatory Commission (CERC) has partly approved the adoption of tariffs discovered through a competitive bidding process for firm and dispatchable renewable energy (FDRE) procured by NHPC, while curtailing the allocation of additional capacity under the greenshoe option.

The Commission adopted tariffs of ₹4.37 (~$0.048)/kWh to ₹4.38 (~$0.048)/kWh for 1.8 GW out of the 2.1 GW sought by NHPC, comprising 1.2 GW under the base allocation and 600 MW under the greenshoe option instead of the full 900 MW proposed.

It also capped the trading margin at ₹0.02 (~$0.0002)/kWh.

CERC also directed all renewable energy implementing agencies (REIAs), including NHPC, to seek clarification from the Ministry of Power on the greenshoe mechanism to ensure transparency and regulatory certainty in future bids.

Background

NHPC filed a petition seeking the adoption of tariffs determined for the procurement of 2.1 GW of interstate transmission system (ISTS)-connected FDRE.

NHPC issued the Request for Selection (RfS) in March 2024 for an initial 1.2 GW, later incorporating a greenshoe option of up to 1.2 GW.

Following an e-reverse auction held in September 2024, five bidders—Essar Renewables, Serentica Renewables, Juniper Green Energy, Hexa Climate Solutions, and Avaada Energy—were selected.

NHPC argued that the tariffs discovered were aligned with prevailing market rates for similar FDRE projects awarded by other REIAs, such as NTPC, SECI, and SJVN.

It also justified the enhanced allocation under the greenshoe option as consistent with the RfS and standard industry practice, despite the absence of an explicit greenshoe provision in the central bidding guidelines.

NHPC also sought approval for a trading margin of ₹0.07 (~$0.0007)/kWh.

Commission’s Analysis

The Commission held that the base bidding process was transparent and in compliance with Section 63 of the Electricity Act, and that the discovered tariffs were reasonable and within the range of market-discovered FDRE tariffs.

It observed that the allocation of substantially higher capacity to certain bidders under the greenshoe option such as Avaada Energy and Hexa Climate Solutions could raise issues of fairness, equal treatment, and transparency.

Consequently, CERC restricted greenshoe allocations to 470 MW for Avaada Energy, 80 MW for Hexa Climate Solutions, and 50 MW for Juniper Green Energy, aligning them with first-round allocations, and limited total greenshoe capacity to 600 MW.

CERC directed NHPC and other REIAs to approach the Ministry of Power for formal clarification on the greenshoe option, including possible limits on additional capacity allocation.

Regarding trading margin, the Commission ruled that NHPC may charge a margin as per the power sale agreements once executed, but capped it at ₹0.02 (~$0.0002)/kWh if adequate payment security mechanisms are not provided.

In June last year, CERC approved a tariff ranging from ₹4.48 (~$0.051)/kWh to ₹4.56 (~$0.052)/kWh for NHPC’s 1.2 GW firm and dispatchable renewable energy (FDRE) projects. The Commission, however, refused NHPC’s request for a trading margin of ₹ 0.07 (~$0.0007)/kWh.

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