CERC Proposes Amendments to Procedure for Grant of ISTS Connectivity for Renewable Projects

Proposal Has been made Keeping in View the 7th Amendment

The Central Electricity Regulatory Commission (CERC) has proposed amendments to the “Detailed Procedure for “Grant of Connectivity to projects based on renewable sources to interstate transmission system (ISTS)”. The draft amendments are open to suggestions and comments from stakeholders and other interested parties up to August 16, 2020.

The new amendments have been proposed keeping in mind the 2019, 7th Amendment to the CERC (Grant of Connectivity, Long-term Access (LTA) and Medium-term Open Access (MTOA) in interstate transmission and related matters) Regulations, 2009.

The new procedure once finalized will apply to all renewable energy project developers, Central Transmission Utility (CTU), Central Government designated agencies, Ministry of New and Renewable Energy (MNRE), Regional Load Dispatch Centers (RLDCs), State Load Dispatch Centers (SLDCs), State Transmission Utility (STUs),and concerned  distribution  companies (DISCOMs) and  Renewable  Energy  Implementing  Agencies like Solar Energy Corporation of India (SECI).

Key Amendments Proposed

• The utilization and transfer of Connectivity will be governed in accordance with Clause 8A of the Connectivity Regulations. According to Clause 8A; A person/company shall not transfer, assign or pledge its connectivity or LTA either in full or parts and the associated rights and obligations to any other person unless it is a subsidiary (100%).
• In case a subsidiary has been allowed to utilize connectivity of parent company, the parent company will be responsible for all operational and commercial responsibilities and obligations, including complying with the Grid Code.
• The grant of Stage-I Connectivity will not create any rights in favor of the grantee on the ISTS. In case due to novel circumstances if the allotted capacity at the location where Stage-I Connectivity is granted becomes unavailable at a later stage, an alternate location will be specified at the time of grant of Stage-II Connectivity.
• Stage-II Connectivity can be granted in cases where an entity is either already a Stage-I grantee or has applied for both Stage-I and Stage-II connectivity at the same time.
• It has also been proposed that any firm implementing renewable hybrid stations will be eligible to apply for separate Stage-II Connectivity for each location based on the same letter of award (LOA) or power purchase agreement (PPA). Firms must submit the locations and capacity at each such location along with the Connectivity applications.
• Upon being granted Stage-II Connectivity a grantee must submit to the CTU documents related to land use rights, proof of financial closure along with sanction letter from financial institution and proof of fund release supported by Auditor’s certificate.
• CTU will monitor status of projects on monthly basis and take timely action.
• CERC has proposed connectivity bank guarantees for Stage-I (Conn BG 1) and Stage-II (Conn BG 2) Connectivity. For a 132 kv bay Conn BG 1 is Rs.5 million and Conn BG 2 is Rs.30 million, for an additional bay the grantee must pay another Rs.30 million. For a 220/230 kv bay Conn BG 1 is Rs. 5 million and Conn BG 2 is Rs.30 million, for an additional bay the grantee must pay another Rs.30 million. For 400 kv bay, Conn BG 1 is Rs.5 million and Conn BG 2 is Rs.60 million, for an additional bay the grantee must pay another Rs.60 million.
• In case the grantee constructs the bay themselves or is allotted a bay allocated for another applicant then Conn BG 2 will not be charged.
• If Stage-II Connectivity is revoked due to delay on part of grantee then Conn BG 1 and Conn BG 2 will be encashed and adjusted in monthly transmission charges. In case the delay is caused due to transmission licensee not awarding package for construction of bays for Stage-II Connectivity then Conn BG 2 will not be encashed.
• If not encashed the bank guarantees (Conn BG 1 and Conn BG 2) will be returned to grantees within 30 days of beginning of commercial operation of the renewable energy project.
• Two or more applicants may apply for Stage-II Connectivity at a common bay along with an agreement duly signed between such applicants for sharing the dedicated transmission line. The Stage-II Connectivity shall be granted to such applicants subject to availability of capacity in the dedicated transmission line.

The new amendments once finalized will help streamline the growth of renewables in India. In the past there have been many projects waiting for evacuation infrastructure as bays were reserved for other projects that hadn’t yet become operational resulting in huge losses for an industry that is already facing the brunt of variable cost of fossil fuels in India.