The Central Electricity Regulatory Commission (CERC) has reserved its judgment, in reply to a petition filed by ReNew Power and its three subsidiaries on submitting a fresh bank guarantee to Power Grid Corporation of India Limited (PGCIL) upon the grant of Stage-II connectivity for a 300 MW wind project in Karnataka.
The Commission noted that in case the petitioner submitted the requisite amount of ₹5 million (~$68,447) to the central transmission utility, the bank guarantee should in no case be encashed.
The wind developers, namely ReNew Power and its three subsidiaries, Auxo Solar Energy, Ostro Energy, and Ostro Kannada Power, had filed a petition seeking the release of the bank guarantee of ₹50 million (~$684,470) furnished by ReNew Power earlier or utilize the same amount for the fresh transmission agreement that will be executed after the grant of Stage-II connectivity.
After participating in the bid process conducted by NTPC, ReNew Power was awarded the letter of award (LoA) for a 300 MW wind power project on October 19, 2018. The developer obtained the Stage-II connectivity and entered into a transmission agreement with PGCIL by furnishing a bank guarantee of ₹50 million (~$684,470).
Auxo Solar Energy, a subsidiary of ReNew Power signed a PPA with NTPC, and NTPC entered into a back-to-back power supply agreement with the Telangana distribution companies (DISCOMs). As per the terms of PPA and PSA, the DISCOMs were required to obtain approval from the State Electricity Regulatory Commission. However, owing to the failure of the DISCOMs to obtain the approval, the developer terminated the PPA with NTPC.
Later, another subsidiary of ReNew Power, Ostro Energy, participated in the bidding process conducted by the Solar Energy Corporation of India (SECI) and was issued the LoA on June 17, 2019, to develop a 300 MW wind project. ReNew Power requested PGCIL to allow Ostro Energy to utilize the Stage-II connectivity granted to it earlier. PGCIL declined the request and asked ReNew Power to file a fresh application at the Hiriyur substation against the SECI LoA.
Accordingly, ReNew Power once again applied for the grant of Stage-II connectivity at the Hiriyur substation and requested PGCIL to either release the bank guarantee submitted under the earlier transmission agreement or use the same amount for Stage-II connectivity applied against the SECI LoA.
PGCIL, in its reply, stated that though the petitioners had withdrawn the Stage-II connectivity for the project under NTPC LoA, they sought fresh connectivity at the same substation under the SECI LoA, but with a different subsidiary company.
PGCIL clarified that after the filing of the reply, the Commission had approved the revised detailed procedure for grant of connectivity to projects based on renewable energy sources to the interstate transmission system (ISTS) on February 20, 2021.
PGCIL argued that as per clause 5.1(3) of the revised procedure, the bank guarantee submitted under the pre-revised procedure would be treated as the guarantee before the revised procedure for ₹5 million (~$68,447), and the second bank guarantee will be for the balance amount. Further, as per clause 5.4. (i), in the event of encashment of such bank guarantees, if Stage-II grantee itself is constructing the associated bay at the ISTS substation, the amount corresponding to the first bank guarantee will be forfeited, and the balance amount treated as the second bank guarantee will be refunded.
ReNew Power requested the Commission to direct PGCIL to accept the amount of ₹5 million through an alternative mode of payment instead of encashment of the bank guarantee as it would adversely affect its credit rating. PGCIL said that that bank guarantee of ₹5 million (~$68,447) through any other mode could be accepted if the Commission directed so.
The Commission, however, reserved its judgment for the time being and directed PGCIL not to encash the bank guarantee if the developer decided to submit the required amount.
Recently, CERC, responding to another petition from ReNew Power, directed PGCIL not to encash bank guarantees submitted towards its wind projects until further orders. Renew Power Wind Energy had informed that the transmission agreement executed with PGCIL was difficult to abide by due to ‘force majeure’ events.
Earlier, CERC had directed SECI not to encash the performance bank guarantee furnished by Adani Wind Kutchh One Limited for the delay in the commissioning of 250 MW wind projects. It had directed the wind developer to keep the bank guarantee valid.
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Rakesh is a staff reporter at Mercom India. Prior to joining Mercom, he worked in many roles as a business correspondent, assistant editor, senior content writer, and sub-editor with bcfocus.com, CIOReview/Silicon India, Verbinden Communication, and Bangalore Bias. Rakesh holds a Bachelor’s degree in English from Indira Gandhi National Open University (IGNOU). More articles from Rakesh Ranjan.