Power regulator allows renewable energy projects to retain grid access by paying compensation

The Central Electricity Regulatory Commission (CERC) has implemented a new compensation-based mechanism to allow renewable energy projects facing key implementation delays to keep their grid access. This relief comes as renewable developers could lose connectivity at any point if they miss three critical deadlines: submitting land ownership documents, securing finance, or reaching the commercial operationalisation date.

According to CTUIL data, up to 5.3 gigawatts (GW) of renewable energy capacity might face connectivity revocation by October due to failure to meet commercial operationalisation dates. The CERC's latest order addresses concerns raised by some renewable energy developers who have approached the commission seeking more time to meet these essential milestones.

The commission emphasizes that entities making progress in project implementation and requiring additional time should be granted extra period, albeit with compensation payments. The compensation rates vary depending on the specific milestone for which the extension is sought: Rs 1,000 per MW per day for land and financing requirements, and Rs 3,000 per MW per day for delays in starting commercial operations.

To be eligible for an extension, developers must demonstrate progress toward project completion at least 15 working days before the original deadline. For land and financing extensions, developers must submit land documentation for at least 20% of the required land. For commercial operation date extensions, developers must submit 50% to 75% of land documents, depending on the project type.

Extension periods can range from three months for land requirements, six months for financing, to up to 12 months for commissioning projects. If renewable energy projects still fail to meet the deadlines, they risk losing their grid connectivity and associated bank guarantees. The compensation collected for delays in commercial operations and land/finance extensions will be used to reduce Monthly Transmission Charges for other users under the Sharing Regulations, 2020.