60 Gw worth of renewable energy projects face connectivity troubles

Delay in transmission connectivity, expiry of ISTS waiver looming fears for the industry

A mismatch between the development of power transmission infrastructure and the commissioning of renewable energy (RE) projects is expected to impact nearly 60 gigawatts (Gw) of RE capacity.

 

Approximately 40 transmission projects awarded in the past few years, set for commissioning in the current and next financial year, are yet to receive power connectivity approval from the Central Transmission Utility (CTU).

 

Concurrently, many of the transmission projects designed to connect RE plants have requested extensions to their construction timelines, as there is no clear outlook on the completion of the corresponding RE projects.

 

Queries sent to the spokesperson of the Ministry of Power and New and Renewable Energy remained unanswered till the time of going to press.

 

This newspaper recently reported that close to 40 Gw RE projects tendered by the four ‘Renewable Energy Implementation Agencies (REIAs) designated by the Ministry of New and Renewable Energy have failed to find buyers for their green power.

 

These projects awarded by RE tendering nodal agency SECI, state-owned power generators NTPC, NHPC, and SJVN are pending as no state has come forward to sign power sale agreements (PSAs), according to a presentation at the review meeting at MNRE.

 

For the transmission project builders, it poses a problem of payment.

 

In October 2023, the Central Electricity Regulatory Commission issued Sharing of Inter-State Transmission Charges and Losses, (Second Amendment) Regulations, 2023. The new rules will be entailed, if power does not flow for the first six months of the commencement of a new transmission line, the service provider will not get tariffs.

 

Pratik Agarwal, Sterlite Power, one of the largest privately-owned transmission companies, said these six months are crucial as project developers will lose money.

 

“RE project developers who win a project block that capacity with the grid for power supply. This blocked capacity is awarded to transmission players like us to bid for and then construct it. But most of this tendered RE capacity is not converting into a PSA. So now transmission players are forced to time their construction with the RE project to avoid losses,” Agarwal told this paper.

 

He pointed at a Catch-22 situation emerging out of this delay. “On one hand, the transmission capacity for RE is blocked with no outlook on how it will be used. On the other hand, we cannot construct a project as soon as we can because there is zero incentive on building a time, rather a penalty,” Agarwal said.

 

To make matters worse, this delay is coinciding with the expiry of the waiver on charges levied to connect to the Inter-State Transmission System (ISTS) or the national grid in June 2025. RE projects due to commission this year had factored the waiver in their tariff, thereby offering lower prices.

 

 According to industry data presented to the government recently, there are currently 35 transmission projects for evacuating RE that are under various stages of tendering and around 32 will be commissioned during 2027.

 

Several projects due to be commissioned by the middle of this year had applied for ISTS connectivity two years back but are still awaiting approval from the CTU, according to industry data submitted to the government. 

 

This paper has reviewed a copy of the submission.

 

Connectivity applications, submitted before June 2023 have been approved, but their operationalisation dates are set for 2026 and even beyond that. This mismatch is impacting the project timeline as these RE projects are nearing commissioning, said a senior industry executive.

 

“RE project developers factored the waiver when they bid for the project two years back. As there is no clarity on the ISTS waiver, this will not only hinder project timelines but the costing as well,” said a senior sector executive.

 

Several industry leaders fear that if the evacuation of power from these RE plants does not begin on time, it could result in higher project costs and potentially lead to stranded assets — in generation and transmission.

 

In 2019, the power ministry announced a waiver for solar and wind power projects on ISTS (Inter-State Transmission System) charges. ISTS is levied on a project when it is connected to the national power grid of India to supply electricity anywhere in India.

 

The ISTS charges could range from ₹1 to ₹2.5 per unit. Since 2019, the tariff of RE projects has fallen below ₹2, partially because of the waiver. The Centre has extended the waiver every year, with the latest till June 2025.