CERC Approves Tariff For Power Grid’s Rajasthan Solar Evacuation Transmission Asset

The Central Electricity Regulatory Commission (CERC) has issued a tariff order determining the annual fixed charges for a transmission asset of Power Grid Corporation of India Limited (Power Grid) developed to evacuate renewable power from Solar Energy Zones in Rajasthan.

The order relates to Phase-II Part-A1 of the transmission scheme designed to support the evacuation of 8.1 GW of solar power from the state. The key asset covered under the petition is the augmentation of the Fatehgarh-II Pooling Station. The work includes a 1,500 MVA, 765/400 kV transformer and associated bays. The asset achieved commercial operation on August 1, 2024, and the tariff has been determined for the 2024–29 tariff period.

The project faced a significant delay during construction. Its commissioning was delayed by 790 days beyond the revised scheduled commercial operation date of June 3, 2022. Power Grid attributed the delay mainly to disruptions caused by the second wave of the COVID-19 pandemic. Labour shortages, demobilisation of workers, supply chain disruptions and lockdown restrictions affected construction activities and equipment supplies.

Another factor was a request from the Central Transmission Utility of India Limited (CTUIL) to defer commissioning of the transformer. The request was linked to environmental and operational challenges affecting renewable energy developers, including concerns associated with the habitat of the Great Indian Bustard.

After examining the reasons, CERC condoned 758 days of the delay. The Commission observed that the execution of the transmission asset was linked to the progress of renewable energy generation projects in the region. However, 32 days of delay were not accepted. As a result, the Commission ordered a pro-rata reduction in Interest During Construction and Incidental Expenditure During Construction for the disallowed period.

The project was initially estimated to cost ₹68.88 crore. Its revised completion cost increased to ₹106.44 crore. CERC, however, found that the final expenditure remained within the approved Revised Cost Estimate and did not involve any unapproved cost overrun.

The increase in project cost was attributed mainly to prevailing market prices for substation equipment, higher interest costs resulting from the extended construction period and additional incidental expenses.

For tariff purposes, CERC approved a capital cost of ₹88.57 crore as of the commercial operation date after making deductions for disallowed interest, undischarged liabilities and unapproved incidental expenditure. The Commission also approved additional capital expenditure of ₹17.42 crore during the 2024–29 period for balance and retention payments and deferred works within the original project scope.

The tariff was calculated using the prescribed 70:30 debt-to-equity ratio. CERC also reviewed the working capital requirement and initial spares in accordance with applicable regulatory limits.

With the order, Power Grid is permitted to recover the approved annual fixed charges from the concerned regional distribution licensees and other beneficiaries using the transmission system.