CERC norms for RE projects positive, need adequate transmission infra: ICRA

Power regulator CERC's norms on inter-state connectivity for renewable energy (RE) projects are a positive for developers but adequacy of transmission infrastructure is critical, rating firm ICRA said today.

The Central Electricity Regulatory Commission (CERC), on May 15, notified the procedure for grant of connectivity to RE-based projects proposing to use the inter-state transmission system (ISTS).

The regulations have been notified amidst significant uncertainty over the grant of connectivity and long-term open access for winning developers in the recent wind power auctions held by the Solar Energy Corporation of India (SECI).

The notified regulations are positive for developers in the renewable energy sector, as they provide clarity on the procedure and timelines for securing approval for connectivity from the central transmission utility," said Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA Ratings.

"Moreover, the regulations accord priority to projects holding letter of award under the tariff-based competitive bidding for granting connectivity, he said.

ICRA said however that uncertainty on availability of adequate infrastructure to evacuate power from the wind power projects bid out by SECI over the past 15 months persists, given that the existing inter-state transmission infrastructure in the states with high wind potential may not be sufficient to provide connectivity to the 5.1 GW bid out by SECI so far.

Further, the augmentation of transmission infrastructure would take about 24-36 months, whereas the winning developers must commission the wind power projects within 18 months from the date of issuance of letter of award/signing of PPAs (power purchase agreement), it added.

The first wind auction scheme by the Ministry of New and Renewable Energy (MNRE) awarded in February 2017 created a rush of connectivity applicants at the Tirunelveli sub-station in Tamil Nadu and Bhuj sub-station in Gujarat, as most of the winners under this scheme propose to connect their projects to these substations.

Since the applications received at both the substations were more than the capacity available and as connectivity is provided on first come first serve basis, the connectivity applicants that applied late would have been granted connectivity for an under-implementation or a new substation, it said.

The construction of a new substation is expected to take much longer at 24-36 months against the SECI stipulated timeline of 18 months for commissioning the wind power projects, it added.

Thus, prolonged delays in securing connectivity would impact the project commissioning timelines and in turn viability of the projects for the winning developers, as delays beyond 6 months from scheduled commissioning date would result in reduction in PPA tariff, Majumdar said.