含羞草社区

Integrating 含羞草社区 numerous regional power transmission grids into one national network has arguably been one of the country’s key success stories in reforming the power sector. A driving force behind establishing a common national grid was implementing the General Network Access (GNA) regime. The Central Electricity Regulatory Commission (CERC) introduced the CERC (Connectivity and General Network Access to the Inter-State Transmission System) Regulations, 2022 (regulations), to simplify how state utilities, generating companies and consumers access and use the national grid. It has been a little more than two years since the regulations were brought into effect. It is, therefore, appropriate to consider what has succeeded in the new framework and which areas still need attention from the regulators.

Access to the national grid under the regulations is granted on a first-come, first-serve basis. As the country powers ahead to meet both its growing electricity demand and its ambitious renewable energy (RE) targets, transmission capacity in the national grid is greatly sought after. It is, therefore, crucial that available capacity is utilised efficiently. For project developers, this means demonstrating a serious intention to develop a project by, among other matters, procuring land, achieving financial closure, and completing projects within set timelines.

The following aspects of the GNA regime have been a success. The have simplified the regulatory framework for obtaining access to the grid by providing that developers obtaining connectivity are automatically granted GNA/access to the grid, from a particular date that is typically linked to project commissioning.

The regulations provide flexibility by allowing developers to apply for connectivity by obtaining a letter of award or entering into a power purchase agreement with a utility (LOA/PPA); acquiring at least 50% of the land required for the project, or submitting a bank guarantee of INR1 million (USD11,900) per MW (land bank guarantee, or land BG). Developers can now pivot from the LOA/PPA route to the land rights/land BG route, and vice versa, during the implementation stage.

Regulators that are proactive in solving implementation issues when new regulations are introduced are a real advantage for a sector. It is encouraging to see the CERC adopting such an approach. For example, to help developers facing delays in securing financing and procuring land for projects, the CERC has extended the timelines for achieving these milestones by recently amending the regulations.

The CERC’s pragmatic approach to resolving implementation issues gives developers comfort. However, there are certain areas that still require some attention. For example, under the regulations, while connectivity granted to an entity can be utilised by its parent or subsidiary, it is the connectivity grantee that is required to acquire land and achieve financial closure. With the increasing popularity of captive power plants, project structuring is now more complex because developers have to set up separate companies to sell power to captive and non-captive users. While the CERC has, through a recent order, allowed a parent company to obtain connectivity based on land acquired by its subsidiary, a formal clarification of this issue will help ease project structuring.

While steps have been taken to amend other regulations to ensure that they do not clash with the GNA framework, there are still areas of inconsistency that need to be resolved. For example, under the National Grid Code developers must commission a minimum capacity of 50MW to be allowed to connect to the national grid. While the minimum capacity for obtaining connectivity under the regulations is also 50MW, the regulations allow developers to relinquish part of that capacity. However, because of the minimum 50MW commissioning threshold, the rights under the regulations may be nullified in certain situations. A clarification from the CERC allowing both regulations to operate consistently would greatly benefit the industry.

While significant challenges remain to ensure that the transmission system will be able to handle the levels of RE integration to which India aspires, there must be a continued focus on proactive problem-solving to create an effective regulatory framework.

Riyaz Bhagat is a partner and Samykya Mukku is a senior associate at Trilegal.