CERC unveils one-time framework to unlock 15.7 GW of stranded transmission connectivity

The Central Electricity Regulatory Commission (CERC) has issued a one-time regulatory framework to release nearly 15.7 GW of transmission connectivity blocked by legacy Letters of Award (LoAs) that did not result in power purchase agreements (PPAs). The order, issued on July 10, 2026, is intended to free up scarce transmission capacity for projects with firm PPAs and accelerate the utilisation of the existing transmission network.

The order follows multiple rounds of stakeholder consultations and applies to connectivity granted based on LoAs issued between January 1, 2019, and May 31, 2025, where PPAs have remained unsigned for more than 12 months.

According to data submitted by four Renewable Energy Implementing Agencies (REIAs), Solar Energy Corporation of India Limited (SECI), NTPC Limited, NHPC Limited and SJVN Limited, LoAs covering 40,420 MW were issued between 2019 and June 2025.

However, PPAs were signed for only 2,338 MW. Based on these LoAs, developers secured in-principle or final transmission connectivity for 22,054 MW of capacity, despite the absence of PPAs.

CERC noted that around 6,350 MW of this capacity is linked to transmission planning constraints. The remaining approximately 15.7 GW can potentially be released or repurposed under the new framework.

Reason for the one-time dispensation

Under the General Network Access (GNA) Regulations, developers are permitted to use an LoA as the basis for seeking transmission connectivity, with the expectation that it will subsequently lead to a PPA and project implementation.

However, many of these LoAs never progressed to the PPA stage. REIAs attributed this to factors including weak demand, lower tariffs discovered in subsequent tenders and a mismatch between generation development timelines and transmission readiness.

As a result, transmission capacity remained reserved for projects that did not move forward, while newer projects with signed PPAs were unable to obtain connectivity.

CERC observed that transmission connectivity is a scarce resource and should not remain blocked indefinitely by projects that have not reached the execution stage.

Four options for affected developers

Developers holding in-principle or final connectivity based on eligible LoAs will have 60 days from the publication of the final list by the Central Transmission Utility of India Limited (CTUIL) to exercise one of four options.

Under Option-I, developers may exit the LoA-based route while retaining their connectivity. They must submit a Performance Bank Guarantee of Rs 8 lakh per MW and commit to a revised Scheduled Commercial Operation Date (SCOD) within 24 months from acceptance. This allows the project to proceed independently of the original LoA.

Under Option-II, developers may replace the original LoA with a PPA obtained under another LoA executed by the same company, its subsidiary or its parent company. The revised SCOD cannot exceed 30 months from the date of conversion. Any remaining capacity must be covered under Option-I or Option-III.

Under Option-III, developers may surrender part or all of their connectivity after obtaining a No Objection Certificate (NoC) from the concerned REIA confirming that no PPA was signed. In such cases, the Connectivity Bank Guarantees will be returned and the released capacity will be made available for reallocation or auction.

Under Option-IV, developers may continue under the existing GNA Regulations without opting for the special dispensation. However, once this option is chosen, they will not be eligible to use the one-time relief provided under the order.

Reallocation and auction process

Connectivity surrendered under Option-III will first be offered to entities that already hold in-principle or final connectivity at the same substation cluster. Such entities may acquire the released capacity by paying a base price of Rs 3 lakh per MW.

If the capacity is not taken up within 15 days, CTUIL will auction it through a price-based bidding process.

For substations where transmission infrastructure has already been commissioned, successful bidders must achieve commercial operation within 18 months. Where transmission augmentation is still under implementation, the timeline will be 24 months or the firm start date, whichever is later.

Bidders will be required to submit an Earnest Money Deposit of Rs 15,000 per MW and a Performance Bank Guarantee of Rs 30,000 per MW.

CERC has directed that proceeds from the auctions and reallocation charges be used to reduce the monthly transmission charges payable by drawee distribution licensees under the Sharing Regulations.

Changes after stakeholder consultation

The Commission incorporated several changes after receiving comments from 35 stakeholders and hearing submissions from 13 stakeholders during the public hearing held on May 23, 2026.

The period available to exercise the available options has been extended from 30 days proposed in the draft to 60 days. The SCOD under Option-I has been increased from 18 months to 24 months.

The Performance Bank Guarantee requirement under Option-I has been reduced from Rs 10 lakh per MW to Rs 8 lakh per MW, while the financial closure period has been extended to 18 months from the revised connectivity intimation.

For auctioned connectivity at substations where transmission infrastructure is already operational, the commercial operation timeline has been extended from 12 months proposed in the draft to 18 months.

Regulatory basis and implementation

The Commission issued the order by invoking its powers under Regulation 41 (Power to Relax) and Regulation 44 (Suo Moto Orders) of the GNA Regulations.

In the order, CERC observed that REIAs should have acted earlier to cancel LoAs that failed to convert into PPAs. It stated that timely utilisation of stranded transmission capacity is necessary to ensure that projects with signed PPAs are not denied access to the transmission network.

For implementation, REIAs have been directed to submit LoA data to CTUIL within seven days. CTUIL will publish a draft list of affected entities within the following seven days. Developers will then have seven days to seek corrections, after which the final list will be published within five days.

Following publication of the final list, eligible developers will have 60 days to exercise their chosen option. CTUIL has also been directed to finalise the auction modalities within 60 days of the order after consulting stakeholders.

The featured photograph is for representation only.