The Gujarat Electricity Regulatory Commission (GERC) has approved the power purchase agreement (PPA) signed between Gujarat Urja Vikas Nigam (GUVNL) and NTPC Renewable Energy (NREL) for procuring 500 MW of solar power at a tariff of ₹2.78 (~$0.032)/kWh.

The project will be at the Khavda Renewable Energy Park in Kutch, Gujarat.

Background

The case originated from GUVNL’s petition seeking GERC’s approval for a PPA with NREL for 500 MW of solar power. NREL had offered to supply 500 MW of solar power to GUVNL at ₹2.78 (~$0.032)/kWh on April 12, 2023. GUVNL and NREL engaged in negotiations between April and June 2023, with the petitioner pushing for terms aligned with tariff-based competitive bidding guidelines (TBCB).

However, NREL maintained that the PPA was bilateral and would not follow standard TBCB clauses. Modifications were eventually agreed upon, including clauses on the scheduled commercial operation date (SCOD) and liquidated damages. The PPA was signed on March 15, 2024.

GUVNL argued that signing a bilateral PPA was necessary due to the advanced stage of project development in the Khavda park, which would help avoid delays typically caused by land acquisition and infrastructure bottlenecks. It also submitted that the tariff offered was within the market range seen in previous Khavda tenders, which was between ₹2.54 (~$0.029) and ₹2.89 (~$0.033)/kWh.

It added that it required the power to meet the renewable purchase obligations (RPOs) mandated by the Ministry of Power and the Commission. NREL did not submit a reply in the proceedings but reiterated that the agreement was not bid-based and should be treated as a negotiated deal.

Commission’s Analysis

GERC approved the fixed tariff of ₹2.78 (~$0.032)/kWh based on the price at which power is delivered to the interstate transmission system (ISTS). It also acknowledged that the tariff was competitive and reasonable compared to recent rates discovered in  Khavda.

However, since the project is expected to be completed after June 30, 2025, it will not be eligible for the government’s 100% waiver on ISTS charges. As a result, GUVNL must pay 25% of the transmission charges and energy losses for using the interstate network.

The Commission emphasized that the approved PPA would also facilitate the implementation of state-level renewable initiatives, such as the Kisan Suryodaya Yojana. It further clarified that approving such bilateral PPAs does not violate procurement norms when the terms are justified, and the power purchase is in the public interest.

GERC acknowledged that timely procurement was essential for GUVNL to comply with its RPO requirements, which are projected to reach up to 43.33% by 2029–30.

Recently, the GERC approved a tariff of ₹3.70 (~$0.043)/kWh for the procurement of 9.9 MW of wind-solar hybrid renewable energy by a power distribution licensee in GIFT City, Gujarat.

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