CERC Issues Draft Order For Mechanism For Treatment Of Connectivity Granted Under The GNA Regulations Based On The LoA Where The PPA Has Not Been Signed Within The Prescribed Timeline.

The Hon’ble Central Electricity Regulatory Commission (“CERC” / “Commission”), vide Draft Order dated 06.05.2026¹ in Petition No. 11/SM/2026, has proposed a one-time regulatory framework for Renewable Energy (“RE”) generating stations which had obtained connectivity under the CERC (Connectivity and General Network Access to inter-State Transmission System) Regulations, 2022 (“GNA Regulations”) on the basis of Letters of Award (“LoAs”) issued by Renewable Energy Implementing Agencies (“REIAs”), only where the LoAs have not been culminated into Power Purchase Agreements (“PPAs”) within the prescribed period.

Accordingly, CERC invoking its powers under Regulations 41 and 42 of the GNA Regulations relating to “Power to Relax” and “Power to Remove Difficulty” and has proposed a one-time mechanism to address such stranded LoA-based connectivity. Under the proposed framework, entities having connectivity granted on the basis of LoAs, where PPAs have not been signed within 12 months from issuance of the LoA, have been provided the following options:

(i) Option-I: Entity may opt to exit from the LoA route and set up the project by submitting a Performance Bank Guarantee (“PBG”) of INR 10 lacs/MW and submit the land document, the financial closure document and the Commercial Operation Date (“COD”) within a stipulated timeline.

(ii) Option-II:
(a) Entity may opt to substitute the original LoA-1 with a PPA signed under LoA-2 issued by the same REIA or a different REIA. Such substitution shall be allowed on the PPA signed either by the connectivity applicant itself, or by its subsidiary, or by its parent company, or by another subsidiary of the same Parent Company.

(b) After the substitution of the PPA, the entity shall achieve the financial closure and the COD within the stipulated timeline of the PPA. COD of the project as per the PPA (as extended, if any) shall be considered as COD for the purpose of converted connectivity, subject to the condition that such COD shall not exceed 30 months from the date of conversion of Connectivity to the PPA route.

(c) The original LoA-1, which was substituted with PPA of LoA-2, shall become an ineligible document for applying for fresh connectivity or for conversion of connectivity from land/ land BG route to LOA route.

(iii) Option-III:

(a) Entity may opt to surrender such Connectivity with return of ConnBG1, Conn-BG2 and Conn-BG3.

(b) Surrendered capacity shall be put up for reallocation with payment of charges or auction, as applicable. Further, CTUIL may auction such connectivity capacity at a base price of INR 3 lakh/MW. The successful bidder would thereafter be required to comply with project development milestones, including land acquisition, financial closure and COD requirements.

(c) The proceeds from such auctions are proposed to be utilised partly towards reduction of transmission charges payable by drawee DICs under the Sharing Regulations, with the remaining amount being transferred to the Deviation and Ancillary Services Pool Account.

The detailed procedure for the treatment of the connectivity granted on the LoA basis and where the PPA is yet to be signed and that PPA has not been signed within a period of 12 months from the date of issuance of the LoA, has been attached as Annexure-I to the Draft Order dated 06.05.2026.

Stakeholder can submit their comments on the above proposed mechanism on or before 21.05.2026.

Footnotes

^{1 Petition No. 11/SM/2026}

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.