The Punjab State Electricity Regulatory Commission (PSERC) approved the long-term procurement of firm, dispatchable renewable energy by the Punjab State Power Corporation from NHPC for a period of 25 years.

The approval covers 160 MW under Tranche II and 250 MW under Tranche VI, subject to the projects being commissioned within the timeline required to retain eligibility for a 50% waiver of interstate transmission charges.

The Commission accepted the tariff of ₹4.33 (~$0.0456)/kWh, with an additional trading margin of ₹0.07 (~$0.00074)/kWh payable to NHPC.

Background

Punjab State Power Corporation filed two petitions seeking approval to procure firm, dispatchable renewable energy from NHPC. The proposed procurement involves hybrid renewable projects combining solar, wind, and battery energy storage systems, designed to supply scheduled power, including peak-hour demand.

NHPC acted as an intermediary procurer under a tariff-based competitive bidding framework. Developers, including Hexa Climate Solutions and ACME Solar Holdings, were selected through reverse auctions conducted under Tranche II and Tranche VI.

For the Tranche II procurement, PSPCL negotiated a supply agreement with Hexa Climate at a revised tariff of ₹4.33 (~$)/kWh. The project configuration included solar, wind, and battery storage, with a declared capacity utilization factor of about 65% and defined peak-hour supply commitments.

For the Tranche VI procurement, PSPCL proposed to procure 250 MW under the greenshoe option. The developer offered commercial improvements, including enhanced capacity utilization and a commitment to absorb a portion of transmission charges up to a specified limit.

PSPCL stated that the procurement was necessary to meet rising electricity demand and to fulfill its renewable purchase obligations. It highlighted that its attempt to procure similar capacity through an independent tender failed to attract bidders, which made procurement through NHPC a practical alternative.

The petitioner also emphasized the advantages of the hybrid structure. The combination of wind and battery storage enables supply during evening and night hours, which aligns with Punjab’s demand pattern, especially during the agricultural season when night supply is required.

It was further argued that the proposed tariff was competitive with recent market discoveries and would reduce reliance on costlier short-term purchases and gas-based peaking power.

NHPC and the project developers supported the petitions and requested timely approval. They noted that project execution depended on regulatory clearance within specified timelines, particularly to secure the benefit of reduced transmission charges.

Commission’s Analysis

The Commission examined the petitions under the resource adequacy regulatory framework, which requires any new procurement to meet the criteria of necessity, cost reasonableness, and efficiency.

On necessity, the Commission observed that Punjab faces growing renewable purchase obligations and rising power demand. It is accepted that additional procurement of renewable power is required to bridge this gap.

On cost, the Commission noted that the negotiated tariff of ₹4.33 (~$0.0456)/kWh was lower than discovered tariffs in comparable bidding processes. The inclusion of a trading margin brought the payable tariff to ₹4.40 (~$0.0463)/kWh, with an estimated landed cost close to ₹4.85 (~$0.0510)/kWh. This was considered reasonable and comparable to existing procurement costs.

The Commission also noted the enhanced capacity utilization factor of 65%, which increases annual energy availability and reduces the effective per-unit burden of transmission charges.

On system efficiency, the Commission highlighted the advantages of hybrid renewable projects. The integration of wind and battery storage enables supply beyond solar hours, supports peak demand, and improves reliability compared to standalone solar projects.

The Commission accepted PSPCL’s submission that wind generation is geographically constrained within Punjab and that sourcing it through interstate projects is necessary. It also recognized that earlier procurement efforts had failed, while NHPC’s aggregated bidding approach ensured greater participation and better risk allocation.

The timing of the projects was considered critical. The Commission noted that commissioning by June 2027 would ensure eligibility for a 50 % waiver of interstate transmission charges. Delay beyond this date would increase costs and affect consumer interest.

Regarding the 250 MW greenshoe capacity, the Commission acknowledged that tariff adoption is pending before the Central Commission. As a result, it granted conditional approval subject to the outcome of that proceeding.

In February, the Central Electricity Regulatory Commission partially approved the adoption of tariffs discovered through competitive bidding for FDRE projects by NHPC, while restricting the allocation of additional capacity under the greenshoe option.

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