CERC Introduces One-Time Mechanism To Release 22 GW Of Stranded ISTS Transmission Capacity

The Central Electricity Regulatory Commission (CERC) has introduced a one-time regulatory mechanism to resolve the long-standing issue of stranded transmission capacity in India’s Inter-State Transmission System (ISTS). The move is intended to free up valuable grid connectivity that has remained blocked by renewable energy projects that failed to progress despite securing transmission access.

According to the CERC, a large number of renewable energy projects awarded between 2019 and mid-2025 were unable to move forward because the awarded projects did not result in signed Power Purchase Agreements (PPAs). During this period, Renewable Energy Implementing Agencies (REIAs) such as SECI, NTPC, NHPC, and SJVN issued Letters of Award (LoAs) for nearly 40.4 GW of renewable energy capacity. However, only about 2.3 GW of these projects eventually secured PPAs, leaving a significant amount of transmission capacity locked by projects that never reached implementation.

The Commission noted that nearly 22 GW of transmission connectivity has remained blocked due to delays in signing Power Sale Agreements (PSAs) by purchasing utilities. This has prevented new and viable renewable energy projects from accessing the grid. To address this challenge, CERC has exercised its power to relax certain provisions of the General Network Access (GNA) Regulations and introduced a special framework aimed at releasing unused transmission capacity while discouraging speculative booking of grid access.

The relief mechanism applies only to developers holding LoAs issued by eligible REIAs between January 1, 2019, and May 31, 2025, where more than 12 months have passed without a signed PPA. The Central Transmission Utility of India Limited (CTUIL) will prepare and verify the list of eligible projects. After the final list is issued, developers will have 60 days to select one of the available options. If they fail to respond within the stipulated period, the existing GNA Regulations will continue to apply, which could result in cancellation of connectivity and encashment of bank guarantees.

The first option allows developers to convert their projects into merchant power plants by exiting the LoA route. To do so, they must obtain a No Objection Certificate from the concerned REIA and submit a Performance Bank Guarantee of ₹8 lakh per MW. These projects will receive a fresh Scheduled Commercial Operation Date (SCOD), limited to a maximum of 24 months.

The second option enables developers to replace their stalled LoA with a new PPA secured through another auction. Under this route, the revised SCOD cannot exceed 30 months. The third option allows developers to surrender all or part of their transmission connectivity if the project is no longer viable. In such cases, the transition bank guarantees will be returned in full.

The transmission capacity released through this process will first be offered to existing users within the same substation cluster at a fixed price of ₹3 lakh per MW. Any remaining capacity will then be allocated through an open auction. Revenue generated from the auction process, fixed-price allocations, and encashed bank guarantees will be used to reduce transmission charges for distribution companies, ensuring that the benefits of the mechanism are ultimately passed on to electricity consumers while improving grid efficiency and supporting India’s renewable energy expansion.