Key Takeaways

• India’s renewable energy groups oppose a CERC proposal that would penalize developers for unsigned power purchase agreements (PPAs).
• The Central Electricity Regulatory Commission aims to manage over 45 GW of stalled renewable projects, potentially auctioning off connectivity.
• Industry leaders argue that existing delays are due to systemic issues in tariff approvals and project logistics, and seek a more flexible timeline for project completion.

Concerns Over Regulatory Proposal

India’s renewable energy sector is pushing back against a regulatory proposal from the Central Electricity Regulatory Commission (CERC). The proposal suggests that developers could lose their interstate transmission connectivity if long-term power purchase agreements (PPAs) are not signed in a timely manner. This has raised concerns among various industry groups who argue that it would unfairly penalize projects delayed for reasons beyond their control.

A staff paper released by CERC in November highlighted that over 45 GW of renewable capacity currently relies on grid connectivity based on letters of award but has not transitioned to signed contracts, which hampers new projects needing transmission access. The proposal includes options to auction off surrendered capacity or declare connectivity forfeited if PPAs remain unsigned for longer than 12 months, exacerbating fears of unnecessary penalties for developers.

Challenges in the Transmission Network

India has set an ambitious target of adding 500 GW of non-fossil fuel capacity by 2030. However, a significant challenge lies in the limited capacity of the country’s transmission network, which spans approximately 495,000 circuit kilometers. This infrastructure is struggling to keep pace with the rapid growth of renewable energy generation.

The National Solar Energy Federation of India has pointed out that auctioning off surrendered connectivity at a premium could lead to increased tariffs, thereby benefiting financially healthier organizations. They argue that grid connectivity should not be treated as a commodity subject to market fluctuation. The delays in signing PPAs primarily stem from sluggish tariff approval processes within state distribution companies, making it difficult for developers to proceed.

Industry Responses and Recommendations

Several stakeholders have voiced their concerns about the proposed deadlines for project completion, particularly in the wind energy sector. Groups like the Indian Wind Turbine Manufacturers Association and the Indian Wind Energy Association have criticized the suggested 18-month deadline as unrealistic, emphasizing that manufacturing and importing turbines and equipment often take significantly longer. They advocate for extending the timeframe for project completion to 24 or even 30 months.

The Solar Energy Corporation of India (SECI), a key government tendering agency, has also expressed its objections to premium-based connectivity auctions, warning that such a system could inflate future energy tariffs. Instead, SECI recommends reallocating connectivity based on the readiness of projects, considering factors such as land acquisition, financial closures, and equipment availability.

Industry players are urging CERC to focus on facilitating timely contract signing instead of instituting punitive measures. By collaborating closely with the ministries of power and renewable energy, they believe that the regulatory body can help streamline processes and enable smoother execution of renewable projects, ultimately supporting India’s renewable energy goals.

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