New Delhi: Renewable energy developers whose projects run behind schedule can now hold on to their allocated transmission access for a longer period by paying a charge, under an order issued by the Central Electricity Regulatory Commission (CERC).
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The regulator has introduced a graded compensation mechanism for developers seeking more time to meet project milestones. It replaces an arrangement under which grid connectivity or a transmission link stood revoked if the developer failed to complete a stage within the stipulated period.
The compensation applies to additional time granted for achieving milestones under the Connectivity and General Network Access to the Inter-State Transmission System Regulations, 2022, known as the GNA Regulations.
CERC said in the order that a number of entities have approached it for extra time to implement renewable projects while retaining their connectivity. Several such cases have already been disposed of by the Commission, with additional time granted against payment of compensation.
The regulator said there was an immediate need to deal with these cases on a uniform basis, where developers had made progress on implementation and were seeking more time to meet the GNA milestones.
CERC also observed that these entities have continued to hold connectivity, which it described as a scarce resource. Additional time should, therefore, be permitted on payment of compensation, irrespective of the reason for the delay, and structured in a graded manner so that the milestones are met at the earliest, the Commission said.
Under the mechanism, the connectivity milestones are the submission of documents for 50 percent of the land required for the connectivity sought, the achievement of financial closure, and the commissioning of the project.
A developer seeking extra time to submit land documents must already hold documents for at least 20 percent of the land required. The application has to be filed no later than 15 working days before the original compliance deadline expires.
The same thresholds apply to requests for more time on financial closure. The developer must furnish land documents for at least 20 percent of the land required for the capacity against which in-principle or final grant of connectivity has been intimated, and must apply at least 15 working days before the original deadline.
Higher thresholds apply depending on the route taken. An entity under the land bank guarantee (BG) route has to furnish land documents for 75 percent of the land required. An entity under the letter of award or power purchase agreement (LOA/PPA) route has to furnish documents for 50 percent of the land required, the order said.
Moody's Ratings said the change reduces a binary risk to a priced one. "CERC's new graded compensation mechanism is a modest credit positive for the Indian renewable energy (RE) sector. By replacing the previous 'comply-or-lose-connectivity' regime with a payable milestone extension charge, it converts a binary tail risk into a quantifiable cost and lets advanced-stage projects preserve scarce transmission connectivity," the agency stated.
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Moody's said the gain is clearest for long-gestation, complex projects such as pumped hydro and large renewable-plus-storage schemes, which are exposed to delays in evacuation infrastructure. It described the effect as broadly neutral for developers running to schedule. Weaker projects get little relief, and the charges could instead add to their costs, the agency stated.