The Delhi Electricity Regulatory Commission (DERC) has approved the New Delhi Municipal Council’s (NDMC) plea to procure 200 MW of solar power from the Solar Energy Corporation of India (SECI) under the interstate transmission system (ISTS)-connected solar project (Tranche–XI).

The Commission approved a tariff of ₹2.61 (~$0.029)/kWh, along with a trading margin of ₹0.07 (~$0.00079)/kWh payable to SECI, for 25 years.

Background

SECI had floated a request for selection on March 31, 2023, for the allocation of 2,000 MW of solar capacity under ISTS solar (Tranche-XI).

The petitioner, NDMC, filed a petition to secure 200 MW of solar power to meet its renewable purchase obligation, address rising electricity demand, particularly during summer peak months, and support its objective of transitioning to 100% renewable energy.

NDMC received an offer from SECI on February 23, 2024, for 200 MW at ₹2.61 (~$0.029)/kWh, plus a trading margin of ₹0.07 (~$0.00079)/kWh, which was accepted on March 4, 2024. DERC granted in-principle approval to enter into the power sale agreement (PSA) on March 27, 2024. The power sale agreement between NDMC and SECI was executed on September 17, 2024.

The power purchase agreement between SECI and the project developer Avaada GJ Sustainable, a wholly owned subsidiary of Avaada Group, was signed on October 4, 2024.

NDMC explained that the L-2 bidder, Avaada GJ Sustainable, was selected due to confirmed early commissioning readiness. The Avaada project was already 70% complete in civil works and electrical installations, with SECI communicating an expected commissioning by November 7, 2025, and a connectivity readiness target by August 16, 2025.

NDMC explained that the ₹2.61 (~$0.029)/kWh tariff was selected because the projects quoted at the L-1 tariff of ₹2.60 (~$0.029)/kWh were expected to be delayed until March 2026 or later. It contended that the delay risk would impose a significant additional transmission cost burden over the project life.

Commission’s Analysis

The Commission examined whether NDMC’s execution of the PSA with the L-2 tariff, rather than the L-1 tariff, was reasonable.

NDMC stated that the Avaada project had completed its switchyard, achieved roughly 70% completion in civil and electrical erection works, and planned to begin module installation in July 2025, targeting early commissioning by November 7, 2025 and ISTS connectivity by August 16, 2026.

SECI informed that the CTU substation required for L-1 projects would become operational only between August and November 2026, thereby delaying commissioning.

The Commission considered the Central Electricity Regulatory Commission (CERC) notification under which projects commissioning before June 30, 2026, would pay 25% transmission charges, whereas those commissioning after June 2026 would pay 50%, then 75% after June 2027, and 100% beyond June 2028. With earlier commissioning, lower transmission costs would offset the ₹0.01 (~$0.00011)/kWh tariff difference.

Approving NDMC’s petition, it held that selecting the project offering ₹2.61 (~$0.029)/kWh instead of the lowest bid of ₹2.60 (~$0.029)/kWh was justified by the earlier commissioning timeline and the significantly lower transmission charges.

In September this year, DERC petitioned the Supreme Court to allow it to liquidate its existing regulatory assets over seven years instead of four years, to mitigate the impact of tariff shock to consumers.

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