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					</table>As a conditional relief measure for renewable energy developers granted grid connectivity access, the Central Electricity Regulatory Commission (<a href="https://cercind.gov.in/" target="_blank" rel="noopener">CERC</a>) recently introduced a standardized mechanism that allows them additional time to meet land, financial closure, and commercial operation milestones by paying milestone extension charges.
Policy Impact 
While developers get more time to meet the milestones, opting to use the full 12-month extension window comes at a hefty price. For example, a 300 MW renewable energy project utilizing the full extension window for delayed commercial operation could incur ~₹421 million (~$4.40 million) in milestone extension charges (MEC). This is even before accounting for applicable mismatch charges or contractual liabilities under its power purchase agreement (PPA).
However, developers under the new general network access regime will avoid losing grid access if they fail to meet the prescribed deadlines. The extra time does not reset several other timelines governing the project.
This could make the cost of a delay potentially bigger than the MEC itself.
The CERC introduced the mechanism after several entities facing or anticipating connectivity revocation sought additional time to meet GNA milestones. Some projects had already reached advanced stages of implementation.
The Commission decided that projects demonstrating sufficient progress should have an opportunity to retain connectivity by paying compensation. Its reasoning hinges on the scarcity of connectivity. A delayed project can prevent another project from accessing the transmission system.
What it Does Not Change
The significance of the mechanism lies partly in what an extension does not change.
The CERC has expressly retained the original firm start date of connectivity, even when additional time is granted to meet a milestone. The developer consequently remains liable for applicable mismatch charges under the Sharing Regulations.
The additional time also does not modify or dilute obligations under a PPA, including provisions concerning liquidated damages.
A project can therefore receive additional time to achieve commercial operation while still facing liabilities tied to other project timelines.
This requires developers to independently manage their land and financial closure milestones, commercial operation requirements, firm start date of connectivity, and contractual commissioning schedule.
The impact is particularly relevant when delays begin early in development. Land acquisition delays can affect financial closure, procurement, and construction, eventually pushing commissioning beyond its prescribed deadline.
CERC treats these milestones independently. If a developer requires additional time for more than one milestone, MEC must be paid separately for each extension. A single underlying project delay can therefore result in charges at multiple stages.
The Cost Rises Quickly
Financial exposure becomes substantial as project capacity and delay duration increase.
For land compliance, the MEC starts at ₹1,000 (~$10.45) /MW/day for the first 30 days, increases to ₹1,100 (~$11.50) /MW/day for the second 30-day period, and ₹1,200 (~$12.54) /MW/day for the third.
A 300 MW project using the entire three-month land extension would consequently pay ₹29.7 million (~$310,442).
Financial closure can be extended by up to six months. MEC remains ₹1,000 (~$10.45) /MW/day for the first three months before increasing to ₹1,100 (~$11.50)/MW/day in the fourth month, ₹1,200 (~$12.54)/MW/day in the fifth, and ₹1,300 (~$13.59)/MW/day in the sixth.
For a 300 MW project using all six months, the resulting MEC would be ₹59.4 million (~$620,884).
COD delays carry considerably greater exposure.
CERC has set the base charge at ₹3,000 (~$31.36)/MW/day for the first six months. It increases to ₹3,300 (~$34.49) /MW/day in the seventh month, ₹3,600 (~$37.63)/MW/day in the eighth, and ₹3,900 (~$40.77)/MW/day in the ninth. From the tenth through twelfth months, the charge rises to ₹6,000 (~$62.72)/MW/day
A 300 MW project using the full 12-month extension would therefore pay approximately ₹421.2 million (~$4.40 million).
These charges apply to the capacity that has not achieved COD. Partial commissioning can therefore reduce the quantum on which subsequent COD extension charges apply.
Delays Beyond a Developer&#8217;s Control Still Attract MEC
Who bears the cost when the developer did not cause the original delay?
Stakeholders wanted an exemption from, or a reduction in, charges for delays caused by force majeure and other circumstances beyond the developers&#8217; control.
CERC rejected an attribution-based exemption from the standardized mechanism.
It held that MEC is payable irrespective of the reason for the delay. It reasoned that connectivity remains a scarce resource regardless of what caused the project to fall behind schedule.
The framework therefore places the immediate cost of retaining connectivity on the entity holding it. It does not itself distinguish between developer-caused delays and uncontrollable delays.
CERC also clarified that MEC payments cannot be treated as a change-in-law event.
Why Developers May Still Pay
The alternative to paying MEC can carry larger consequences for projects that have already committed capital and made substantial development progress.
The MEC mechanism gives progressing projects the option to retain connectivity while completing the remaining work.
Eligibility requirements are designed to restrict that option to projects demonstrating measurable progress.
A developer seeking additional time for land compliance must already have documents covering at least 20% of the required land. A 20% land threshold also applies to financial closure extensions for the applicable routes.
The threshold rises substantially for COD extensions. Projects under the Land or Land Bank Guarantee route must demonstrate land availability covering at least 75% of the requirement, while projects under the Letter of Award or PPA route must demonstrate at least 50%.
Recovering a Delay Has a Financial Reward
The framework rewards developers for recovering project schedules.
When a project achieves commercial operation on time. 50% of the MEC paid for additional time relating to land and financial closure, corresponding to the capacity commissioned within the permitted period, can be returned without interest.
Developers can also ask the Central Transmission Utility of India (CTUIL) to retain the unused MEC already paid for one milestone and adjust it against the MEC required for another milestone.
Clearing Connectivity Held by Stalled Projects
The mechanism also changes how CTUIL can deal with delayed projects.
Instead of relying on individual proceedings whenever a project seeks relief from an approaching milestone, CTUIL now has standardized eligibility criteria, processing timelines, and charges for determining whether a project can retain connectivity.
Once CTUIL approves additional time and communicates the applicable MEC, the developer must make the prescribed payment within three working days. Failure to do so leaves connectivity subject to the existing GNA Regulations.
The proceeds also feed back into transmission charges. The ERC has directed that 100% of MEC collected for COD extensions and 50% collected for land and financial closure extensions be used to reduce monthly transmission charges.
The remaining 50% collected for land and financial closure extensions will be held separately because it may have to be returned to developers that subsequently meet the prescribed COD conditions. Amounts that do not qualify for refund will ultimately also be used to reduce monthly transmission charges.

CERC’s Connectivity Relief a Double-Edged Sword for Delayed Renewable Projects

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