CERC norms on inter-state connectivity for RE projects is positive for the developers; however, adequacy of transmission infrastructure critical

The Central Electricity Regulatory Commission (CERC), on May 15, 2018 notified the procedure for grant of connectivity to renewable energy-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).

Says Mr. Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA Ratings“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. Moreover, the regulations accord priority to projects holding letter of award under the tariff-based competitive bidding for granting connectivity.”

Despite this, the 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.

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. 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.