The Central Electricity Regulatory Commission (CERC) has introduced a one-time relief mechanism for renewable energy projects that have been delayed because their Power Purchase Agreements (PPAs) have not been finalized. The decision is expected to address a major challenge in India’s renewable energy sector, where a large amount of interstate transmission capacity has remained blocked despite not being used.
According to the commission, more than 22 GW of interstate transmission capacity is currently tied up in old Letters of Award (LoAs) that have not progressed into final power supply agreements. This has prevented many new renewable energy projects from accessing the national transmission network, even though they are ready to move forward.
The problem originated from CERC’s General Network Access (GNA) Regulations introduced in 2022. Under these regulations, renewable energy developers were allowed to obtain grid connectivity based on a Letter of Award issued by government agencies such as SECI, NTPC, NHPC, and SJVN. However, in many cases, distribution companies (discoms) and buying utilities did not sign the corresponding Power Sale Agreements (PSAs). As a result, developers retained transmission capacity without having confirmed power purchase contracts, leaving valuable grid infrastructure unused for long periods.
To resolve this issue, CERC has focused on legacy LoAs issued between January 2019 and May 2025 where PPAs have remained unsigned for more than 12 months. Following consultations with 35 stakeholders and a public hearing, the commission has relaxed certain provisions of the GNA regulations and provided developers with a 60-day window to choose one of four available options.
The first option allows developers to exit the state-backed LoA route without losing their grid connectivity. To do so, they must submit a No Objection Certificate (NOC) from the issuing agency and provide a reduced Performance Bank Guarantee (PBG) of ₹8 lakh per MW. These projects can then move forward as merchant or independently contracted projects, with a maximum commercial operation deadline of 24 months.
The second option enables developers to replace a stalled LoA with an active PPA linked to another project LoA. This provision allows common parent companies or subsidiaries to transfer project capacity while meeting a commercial operation timeline of up to 30 months.
The third option gives developers the opportunity to surrender their unused grid connectivity without any financial penalty. In such cases, they will receive a full refund of their original connectivity bank guarantees.
The fourth option allows developers to continue under the existing GNA regulations. However, they will remain subject to the normal regulatory requirements, including penalties and possible cancellation of connectivity if project milestones are not achieved.
CERC has also outlined how the released transmission capacity will be allocated. The Central Transmission Utility of India Limited (CTUIL) will first offer the available capacity to ready-to-commission projects within the same substation cluster. Any remaining capacity will be allocated through a premium-based electronic auction with a base price of ₹3 lakh per MW. The commission has directed that all revenue generated from these auctions, along with any forfeited bidding deposits, will be used to reduce monthly transmission charges, ensuring that consumers and distribution utilities benefit from the efficient use of the national transmission network.
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