CERC Approves Tariffs for 1.4 GW of ISTS-Connected Solar Projects

The Commission also approved the trading margin of ₹0.07/kWh as agreed in the PSAs


The Central Electricity Regulatory Commission (CERC) recently approved the tariffs of ₹2.37 (~$0.028)/kWh and ₹2.38 (~$0.029)/kWh discovered through a competitive bidding process for 1,400 MW of interstate transmission system (ISTS)-connected solar power projects (Tranche-IX).

The Commission also approved the trading margin ₹0.07 (~$0.0009)/kWh as agreed in the power sale agreements (PSAs).

The Commission noted that the changes in rates of Safeguard Duty, Goods and Sevices Tax (GST), Basic Customs Duty (BCD) on solar inverters, and the Great Indian Bustard issue were ‘Change in Law’ events as per the provisions of the power purchase agreements (PPAs).

SECI had filed a petition for the adoption of tariffs for 2,000 MW of solar power projects (Tranche IX) connected to the ISTS and selected through a competitive bidding process as per the guidelines issued by the Ministry of Power.


SECI had invited bids for the selection of 2,000 MW of ISTS-connected solar power projects (Tranche-IX) on March 20, 2020. In response, 11 bids were received, offering an aggregate capacity of 5,280 MW.

The e-reverse auction was conducted on June 30, 2020, and seven bidders offering an aggregate capacity of 2,000 MW were selected.

SECI had earlier filed a petition before the Commission for the adoption of tariffs. The Commission restricted the adoption of tariffs with respect to a capacity of 300 MW, for which the PPA was signed with the developers.

The Commission had allowed SECI to approach it for the adoption of tariff for the remaining 1,700 MW) after it was tied up under the PPAs and PSAs.

SECI  submitted that it had signed PPAs for 1,400 MW out of 1,700 MW with the successful bidders following the PSAs signed by the SECI with the distribution companies (DISCOMs).

CERC Tariff Adoption- 2

The nodal agency said that regarding the balance 300 MW capacity awarded to Solarpack Corporacion Technologica SA, it had signed the PSA with Jammu & Kashmir Power Corporation for 100 MW, but the balance capacity for 200 MW had not been tied up with any DISCOM.

SECI had sought the adoption of tariff for 1,400 MW capacity while leaving the remaining capacity until the finalization of the PSAs and PPAs.

Commission’s analysis

The Commission said that SECI had already clarified the position that concerning the ‘Change in Law’ impact, the restitution provision in regard to the carrying cost as provided in the guidelines and the ‘Change in Law’ rules should be applicable to all the PPAs and PSAs executed under Tranche IX program.

It also approved the trading margin ₹0.07 (~$0.0009)/kWh as agreed in the PSA.

The central regulator said that the parties had agreed that in case of changes in rates of Safeguard Duty, GST, and BCD resulting in a change in project cost, such change would be treated as a ‘Change in Law’ event.

The Commission recognized that the increase in BCD on the import of solar inverters and the GST rate increase from 5% to 12% on solar modules, cells, and other solar power generation equipment were ‘Change in Law’ events.

While the Commission held that the GIB order of the Supreme Court, post the bid submission date, was a ‘Change in Law’ event, the entitlement of the developers to claim relief thereunder had to be demonstrated on a case-by-case basis.

Further, CERC noted that while the developers had provided a waiver to SECI concerning the compensation for the impact on the project cost following the BCD notification, the undertakings were given considering that they would avail the benefit of the concessional rate of 5% customs duty as permitted under the Project Import Regulations, 1986.

The Commission said it was apparent that the developers had given the waiver on the claim of BCD not only in the context of MNRE’s notification but in terms of the BCD rates specified therein, thereby waiving its right to claim the ‘Change in Law’ relief until any further increase of BCD.

It, therefore, rejected the request of the developers to recognize the BCD of 25% on solar cells and 40% on solar modules as ‘Change in Law’ events in terms of the specific provisions of the PPAs executed between the developers and SECI.

Further, CERC stated that the PPAs provided for the extension in scheduled financial closure and scheduled commissioning date for an equal number of days for which the tariff adoption order for the adoption of tariff y the appropriate Commission was delayed beyond 120 days.

Earlier, CERC had adopted tariffs of ₹2.55 (~$0.034)/kWh and ₹2.56 (~$0.035)/kWh discovered through competitive bidding by NHPC for 2 GW solar projects.

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