How CERC Plans to Revive 16 GW of Stalled Renewable Energy Projects
In a significant move aimed at easing India’s growing transmission bottleneck, the Central Electricity Regulatory Commission (CERC) has unveiled a one-time framework that could unlock nearly 16 GW of stalled renewable energy projects by allowing developers to either repurpose, surrender or substitute connectivity obtained through legacy Letters of Award (LoAs).
The order addresses a long-standing issue in the renewable sector, where developers secured interstate transmission system (ISTS) connectivity based on LoAs issued by Renewable Energy Implementing Agencies (REIAs) such as SECI, NTPC, NHPC and SJVN, but failed to sign power purchase agreements (PPAs) due to delays in corresponding power sale agreements (PSAs) with distribution companies.
According to data analysed by the regulator, REIAs issued LoAs aggregating 40.42 GW between 2019 and June 2025. However, PPAs have materialised for only 2.34 GW of this capacity. Connectivity linked to projects lacking PPAs currently stands at 22.05 GW, of which around 6.35 GW faces transmission planning constraints. This leaves nearly 15.7 GW of connectivity that could potentially be released or better utilised under the new framework, CERC said.
Why Projects Got Stuck
The regulator noted that several factors contributed to older LoAs failing to translate into PPAs, including lower demand from discoms, declining renewable tariffs in newer bids, increasing preference for round-the-clock and peak power products, and concerns over projects whose connectivity timelines extend beyond December 2028.
This has resulted in a situation where newer projects with signed PPAs are unable to obtain transmission connectivity because substantial ISTS capacity remains blocked by projects that have made little progress.
“Connectivity is a scarce resource and the need of the hour is to utilise stranded transmission capacity in a timely manner,” the Commission observed in its order.
Four Options for Developers
Under the new mechanism, developers whose LoAs have remained without PPAs for over 12 months will be able to choose among four options.
Option 1: The first option allows developers to exit the LoA route without surrendering connectivity, effectively converting projects to a land-based route by furnishing additional performance guarantees and revised commissioning timelines.
Option 2: The second option permits developers to substitute the original LoA with another signed PPA, including those secured by a parent company or subsidiary, thereby preserving connectivity rights.
Option 3: The third option allows developers to voluntarily surrender connectivity and receive a refund of connectivity bank guarantees, a major relief considering that existing regulations require encashment of guarantees upon relinquishment.
Option 4: The fourth option enables developers to continue under the existing General Network Access (GNA) framework without opting for any of the new measures.
Entities covered under the order will have 60 days after publication of the final list by Central Transmission Utility of India Ltd (CTUIL) to exercise these options.
Connectivity Auctions Introduced
A key feature of the order is the introduction of a market-based mechanism for reallocating surrendered connectivity. Connectivity released under the surrender route will first be offered to projects already holding connectivity within the same substation cluster. Any remaining capacity will subsequently be auctioned by CTUIL through an open bidding process.
CERC has fixed a base price of Rs 3 lakh per MW for such auctions, with proceeds proposed to be utilised to reduce monthly transmission charges payable by designated interstate customers. The regulator has also directed CTUIL to formulate detailed auction guidelines within 60 days.
Relief for Developers, Better Utilisation for Grid
Industry participants have largely welcomed the move, arguing that it could significantly improve transmission utilisation while giving developers greater flexibility amid changing market dynamics.
The CERC order also reflects increasing regulatory concern over speculative booking of transmission connectivity, an issue that has become more pronounced as India’s renewable capacity pipeline expands rapidly.
By creating a structured exit and reallocation mechanism, the Commission aims to ensure that transmission infrastructure—one of the scarcest resources in the energy transition—is allocated to projects with a higher probability of execution.
For India’s renewable sector, which is targeting 500 GW of non-fossil fuel capacity by 2030, the release of nearly 16 GW of stranded connectivity could provide a meaningful boost to project execution and alleviate one of the industry’s most pressing bottlenecks.