The Central Electricity Regulatory Commission (CERC) has approved the adoption of the tariff discovered through competitive bidding for a 300 MW interstate transmission system connected wind power project awarded by the Solar Energy Corporation of India (SECI).

The Commission held that the tariff of ₹3.97 (~$0.04388)/kWh discovered in the bidding process was in accordance with Section 63 of the Electricity Act and the Ministry of Power’s wind bidding guidelines.

It also allowed SECI to charge a trading margin of ₹0.07 (~$0.00077)/kWh as agreed in the power sale agreement, subject to compliance with the applicable regulations.

Background

The petition arose from a tariff-based competitive bidding process conducted by SECI for the procurement of 600 MW of ISTS-connected wind power under Tranche XVIII.

Bids for a total capacity of 580 MW were received from three entities, of which two qualified at the techno-commercial stage, totaling 400 MW.

In line with the bidding rules, the awardable capacity was restricted to 80% of the technically qualified capacity, resulting in an awardable quantum of 320 MW.

Following the e-reverse auction, Torrent Green Energy emerged as the successful bidder with the lowest discovered tariff of ₹3.97 (~$0.04388)/kWh.

However, due to the ceiling on allocation, which limited each bidder to 50% of the total tendered capacity, SECI awarded only 300 MW to the successful bidder. The remaining 20 MW could not be allocated as it did not meet the minimum project size requirement for ISTS-connected wind projects.

SECI approached the Commission seeking adoption of the discovered tariff and approval of the trading margin proposed in the power sale agreement executed with Bihar State Power Holding Company.

SECI submitted that the bidding process was conducted transparently, competitively, and in compliance with the guidelines and bidding documents. It contended that regulatory approval was essential to enable financial closure and timely project commissioning.

Commission’s Analysis

The Commission noted that the procurement process followed the Ministry of Power’s wind bidding guidelines.

It observed that restricting the awardable capacity to 80% of the qualified capacity and applying the 50% allocation ceiling were consistent with the provisions of the request for selection document.

The Commission also considered the structuring of the awarded capacity into two project blocks of 175 MW and 125 MW. It noted that the declared capacity utilization factors and annual energy estimates were within technically justifiable limits.

Giving its approval for the discovered tariff, the regulator accepted SECI’s explanation for the non-allocation of the remaining 20 MW on the ground that it would have violated the minimum project size criteria prescribed for ISTS-connected wind projects.

Regarding trading margin, the Commission noted the provision in the power sale agreement allowing SECI to charge ₹0.07 (~$0.00077)/kWh. It held that such a margin was permissible under the regulatory framework, provided SECI complied with the requirements for payment security mechanisms, such as escrow arrangements or letters of credit. In the absence of compliance with these conditions, the trading margin would be capped at ₹0.02 (~$0.00022)/kWh.

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