The Central Electricity Regulatory Commission (CERC) has introduced a one-time mechanism to address renewable energy projects that secured interstate transmission system connectivity but power purchase agreements (PPA) have not been signed even 12 months after the issuance of the letters of award.

The order covers eligible entities that obtained in-principle or final connectivity under LoAs issued by Renewable Energy Implementing Agencies (REIAs) between January 1, 2019, and May 31, 2025, for which PPAs remain unsigned.

This mechanism will free up 15.7 GW of unused connectivity to other developers, according to CERC’s analysis.

The REIAs must furnish the data to the Central Transmission Utility of India (CTUIL) within seven days of the order. It must publish a provisional list within seven days of receiving the data, allow seven days for corrections, and publish the final list within the following five days.

The mechanism follows a CERC staff paper published in November 2025 that proposed options for treating connectivity granted against letters of award (LoA) that had not culminated in PPAs.

Under the framework, eligible developers will have 60 days after the CTUIL publishes the final list to choose one of four options for the treatment of their connectivity.

A no-objection certificate (NoC) from the concerned REIA has been prescribed as an eligible document to seek Options I,II, and III.

Option I: Exit the LoA Route but Retain Connectivity

Developers may exit the LoA-based route without surrendering their connectivity by obtaining a NoC from the REIA, furnishing a performance bank guarantee of ₹800,000 (~$8,382)/MW, and providing a revised scheduled commercial operation date (SCOD).

The revised SCOD cannot exceed 24 months from CTUIL’s approval of the developer’s choice of this route, or from the firm start date of connectivity, whichever is later.

After verifying the documents submitted by the developers, CTUIL will issue a revised connectivity grant.

The connectivity bank guarantees already submitted will remain valid and will be returned after the project achieves commercial operation. The additional performance bank guarantee for the generation capacity declared to be in commercial operation will be released one year after commissioning.

If the developer fails to achieve COD for all or part of the capacity within the applicable timeline, connectivity for the corresponding quantum will be revoked. The connectivity bank guarantees will be treated under the GNA Regulations, and the additional performance bank guarantee will be encashed proportionately.

If the developer has not signed PPAs under the LoA and 12 months have not elapsed from the date of issuance of the LoA, the developer may exercise Option I, provided the REIA permits them to exit through this route.

Option II: Substitution of Original LoA

Developers may substitute the original LoA used to obtain connectivity with a PPA signed under another LoA. The replacement PPA may have been signed with any REIA, a distribution licensee, or an authorized agency on behalf of a distribution licensee.

The replacement PPA may belong to the same developer, its parent company, or another subsidiary of the same parent. However, under Option II, the SCOD cannot exceed 30 months from the date CTUIL converts the original connectivity under the substituted PPA.

Developers opting for this route must undertake not to seek an SCOD extension beyond 30 months from the date of conversion.

Where the PPA capacity is lower than the connectivity granted under the original LoA, the balance capacity must be converted under Option I, substituted using another eligible PPA under Option II, or surrendered under Option III.

If the installed capacity specified in the PPA exceeds the contracted capacity, developers may retain connectivity for the excess installed capacity under Option I by furnishing the applicable performance bank guarantee.

Where the contracted capacity under the replacement PPA exceeds the connectivity granted under the original LoA, the substitution will be limited to the connectivity quantum granted under the original LoA. Any connectivity already obtained using the replacement LoA or its associated PPA must be converted under Option I or surrendered under Option III.

Option III: Surrender Connectivity

Developers may surrender all or part of their connectivity by obtaining a NoC from the REIA. The entity may choose Option I or Option II for the balance retained connectivity.

Upon closure of the connectivity application, CTUIL will return the applicable connectivity bank guarantees after settlement of any dues under the Sharing Regulations. The connectivity converted under Option I or Option II must be at least 50 MW.

The surrendered capacity must first be offered for reallocation to eligible connectivity grantees in the same substation cluster. Only the balance capacity will be auctioned by CTUIL.

The balance transmission capacity will first be offered to developers holding in-principle or final connectivity in the same substation cluster through the reallocation mechanism under the GNA Regulations.

If both the substation and the corresponding ISTS augmentation required to make GNA effective have achieved commercial operation, projects awarded the balance transmission connectivity must achieve commercial operation within 18 months of the connectivity award.

Where the substation or the corresponding ISTS augmentation has not achieved COD, the project SCOD cannot exceed 24 months from the connectivity award or the firm start date of connectivity, whichever is later.

The base auction price has been fixed at ₹300,000 (~$3,143)/MW. Successful bidders must deposit the bid amount in cash and furnish a performance bank guarantee of ₹30,000 (~$314)/MW.  They must also furnish a non-refundable application fee of ₹500,000 (~$5,219.55) and an earnest money deposit of ₹15,000 (~$156.59)/MW.

After being awarded the surrendered connectivity capacity, the successful bidder must sign a connectivity agreement with CTUIL within one month.

If the successful bidder fails to achieve COD for all or part of the awarded capacity within the stipulated or extended timeline, connectivity for the corresponding quantum will be revoked, and the proportionate performance bank guarantee will be encashed.

The proceeds from auctions and reallocations will be used to reduce monthly transmission charges for designated inter-state transmission system customers.

The Commission has also directed CTUIL to prepare detailed auction modalities within 60 days in consultation with stakeholders.

Option IV: Continue Under GNA Regulations

Under this option, developers may choose to continue under the existing GNA framework without availing any of the one-time relief measures.

Entities that do not exercise Options I, II, or III within 60 days of CTUIL issuing the final list will be deemed to fall under Option IV and will lose the right to use the one-time relief mechanism.

In March 2026, CERC granted conditional relief to renewable energy developers whose interstate transmission system connectivity was revoked due to delays in project commissioning.

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