Central Electricity Regulatory Commission (CERC), India’s chief power sector regulator, recently issued a draft procedure for applying for connectivity to the inter-state transmission system (ISTS). The draft procedure comes in the wake of last year’s CERC order on transmission connectivity ‘squatting’ and seeks to provide much needed clarity for ISTS connectivity for RE projects. It is applicable to all new projects greater than 50 MW and incorporates a two-stage approval process.

• Stage I connectivity can be sought by developers at any time irrespective of their project status. Approvals are proposed to be granted within 60 days of application but would lapse after 2 years unless Stage II application is submitted within 24 months of the approval date. This stage is essentially meant to serve as an advance planning guide for all relevant parties;
• Stage II approvals are to be provided on a first-come, first-serve basis to developers once there is demonstrable progress on the projects – respective PPAs are signed and the developers have acquired rights to over 50% of total land required for the projects or if they have achieved financial closure or can show access to 10% of total estimated capital expenditure. Approvals are proposed to be provided within a month but shall lapse if the applicants fail to sign binding agreements and submit necessary bank guarantee (INR 50 million for every 300 MW project capacity) within a month. Similarly, if the developers fail to meet agreed technical milestones for the projects, the agreement and bank guarantee shall be forfeited;

Developers can apply for Stage I and II approvals at the same time. Crucially, the procedure includes ongoing interchange of information between various parties and regular monitoring of project progress. There are some intricate issues at stake here and the developers want a number of amendments to the draft procedure. Final procedure approval may yet take many months after consultation with all public and private sector stakeholders.

Transmission connectivity has become an increasingly thorny issue for RE projects over the last few years due to lack of coordination between various government agencies. Crux of the problem is that creation of transmission capacity – pooling substations and/or transmission line – usually takes 3-4 years. But the projects, once allocated, have a timeline of only 1-1.5 years for implementation. Developers are rightly concerned that there is simply not enough transmission capacity in resource rich states of Rajasthan, Gujarat and Tamil Nadu to match MNRE’s RE procurement plans. Currently, there are 9,000 MW of wind and solar ISTS tenders pending allocation.

ISTS tenders form the cornerstone of MNRE’s new tendering plan to meet 175 GW target by March 2022 and supplying RE power to deficit states in north and east including Uttar Pradesh, Bihar, Punjab, Haryana, Chhattisgarh and West Bengal. But transmission bottlenecks mean that actual progress is likely to be much slower than usual