Power projects should be granted connectivity on basis of PPAs: CERC

A staff paper suggests shifting from LoA-based approvals to PPA-linked or auctioned connectivity to ensure timely project execution and better use of grid assets

Power projects should be granted transmission connectivity based on power purchase agreements (PPAs) instead of letters of award (LoAs) for efficient utilisation of the transmission system, according to a staff paper uploaded by the Central Electricity Regulatory Commission on its website.

 

It has alternatively suggested following an auction mechanism to grant connectivity in the future with a firm commitment to implement the project by a specified date.

 

Around 31.8 gigawatts (GW) of capacity has been granted connectivity for which PPAs are yet to be signed, resulting in unused transmission lines.

 

“Generally, the RE (renewable energy) developers start implementing the project only after signing the PPA. If PPA signing is delayed, a situation arises in which a large quantum of the connectivity granted on the basis of LoA is not optimally utilised,” the paper said.

 

It emphasised that other entities, which can bring the project within that time frame, are unable to secure connectivity on account of no evacuation margin in the existing planned transmission system.

 

For such projects, new transmission systems are required to be planned and implemented, which might have a long implementation time frame and lead to cost implications for the system as a whole, it added.

 

“Connectivity, as a scarce resource, should be allotted only to committed players who are ready to bring the project to fruition in a timely manner and ensure its utilisation,” said the CERC paper.

 

The Ministry of New and Renewable Energy (MNRE) is currently assessing renewable energy projects for which PPAs and power sale agreements (PSAs) have not been signed.

 

Experts believe the suggestions would be a positive move for the industry as connectivity would not be blocked upfront. “The staff paper by CERC proposed remedies for new projects as well as stranded ones. In some of the projects which are being developed, the connectivity is a challenge which has resulted in curtailments,” said Ankit Jain, vice-president and co-group head, corporate ratings, ICRA.

 

The recommendations are up for consultation and stakeholders can share responses with the regulator by 15 December 2025.

 

The Indian government, as per the National Electricity Plan (NEP), aims to achieve a target of 500 GW of installed electricity capacity from non-fossil fuel sources by 2030.