The Central Electricity Regulatory Commission (CERC) has proposed a one-time framework to deal with renewable energy projects that secured transmission connectivity under the General Network Access (GNA) regulations on the basis of Letters of Award (LoAs), but where power purchase agreements (PPAs) have not been signed within 12 months.

The Commission observed that connectivity should be allocated only to entities with firm commitments and project readiness.

In its draft order, the CERC proposed three options for affected developers:

• Under Option I, entities may opt to exit from the LoA route and set up the project by submitting a performance bank guarantee (PBG) of ₹1 million (₹10,557)/MW and submitting the land document, the financial closure document, and the scheduled commercial operation date (SCOD) within the prescribed timeline.
• Under Option II, developers may substitute the original LoA with a PPA signed under another LoA issued by the same or a different Renewable Energy Implementing Agency (REIA).
• Under Option III, entities may surrender connectivity and receive the return of Conn-Bank Guarantee (BG)1, Conn-BG2, and Conn-BG3, after which the surrendered connectivity would be auctioned by the Central Transmission Utility of India (CTUIL).

Stakeholders have until May 21, 2026, to submit their feedback.

Background

CERC noted that the GNA Regulations allowed renewable energy generating stations to obtain connectivity based on LoAs issued by REIAs.

The framework was introduced with the expectation that such LoAs would eventually convert into PPAs and power sale agreements (PSAs).

However, the Commission found that a large quantum of connectivity granted through the LoA route had not resulted in signed PPAs. As a result, several projects had failed to progress despite occupying valuable transmission capacity.

To address the issue, CERC issued a staff paper on November 25, 2025, proposing three alternatives: permitting developers to exit the LoA route without surrendering connectivity, allowing substitution of LoAs with other PPAs, or surrendering and auctioning the connectivity.

Around 30 stakeholders submitted comments on the proposals. The Ministry of Power recommended permitting a one-time surrender of connectivity without forfeiture of bank guarantees for legacy LoAs where PPAs or PSAs had not materialized.

The Ministry also suggested reallocating the freed-up connectivity through a transparent auction mechanism and assigning the auction revenue to CTUIL.

Some stakeholders opposed the proposal for additional PBG requirements, arguing that such financial conditions would create barriers for smaller developers.

Others sought longer timelines for project commissioning, land document submission, and financial closure.

At the same time, some stakeholders supported auction-based allocation of connectivity, stating that it would improve utilization of transmission infrastructure.

Commission’s Analysis

CERC opined that connectivity obtained through LoAs should not remain blocked indefinitely where PPAs have not been signed for over 12 months.

It proposed a three-way mechanism for developers affected by delays in signing PPAs.

Under the proposed framework, surrendered connectivity under Option III would first be offered through a reallocation process and, if unallocated, auctioned by CTUIL. The auction would proceed by increasing bids, with the highest bid above the base price winning the allocation. The Commission proposed a base auction price of ₹300,000 (~$3,167)/MW.

The draft order proposes that bidders would have to pay a non-refundable application fee of ₹500,000 (~$5,279) plus applicable taxes and furnish an earnest money deposit (EMD) of ₹15,000 (~$158.36)/MW, equivalent to 5% of the base price, in the form of a bank guarantee.

Successful bidders would be required to deposit the bid amount in cash and furnish a PBG of ₹30,000 (~$316.72)/MW, equal to 10% of the base price, within 15 days of conclusion of the bidding process.

Failure to furnish the bid amount or the PBG within the stipulated timeline would lead to revocation of the awarded connectivity and encashment of the EMD.

The Commission also laid down timelines for land acquisition, financial closure, and achievement of commercial operation.

Where the substation and associated transmission augmentation have already achieved commercial operation, the commissioning date of the project cannot exceed 12 months from the date of award of connectivity.

Land documents must be submitted at least nine months before SCOD, while financial closure documents must be furnished at least six months before SCOD.

For projects where the substation or associated augmentation is still under construction, the SCOD cannot exceed 24 months from the award or start date of connectivity, whichever is later.

Developers must furnish land documents within 12 months of the award of connectivity or within nine months of the communication of tentative substation coordinates, whichever is later.

Financial closure documents must be submitted within 15 months of the award of connectivity or within one month of the connectivity start date, whichever is later.

The Commission has proposed allowing limited extensions upon payment of milestone extension charges. Developers may seek up to three additional months for submitting land documents, up to three additional months for financial closure, and up to six additional months to achieve commissioning.

However, if developers fail to meet land acquisition or financial closure milestones within the prescribed or extended timelines, connectivity would be revoked under the GNA Regulations, and the PBG would be encashed.

Similarly, if developers fail to achieve commissioning for part or full project capacity within the stipulated or extended timelines, connectivity corresponding to the delayed quantum would be revoked, and the proportionate PBG would be encashed.

The Commission directed REIAs to submit details of LoAs in which PPAs remain unsigned for more than 12 months, and instructed CTUIL to furnish the corresponding connectivity status.

Recently, CERC held that renewable energy generators are liable to pay bilateral transmission charges for the associated transmission system until their projects achieve commercial operation. It rejected their request to quash the invoices issued by the CTUIL.

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