The Central Electricity Regulatory Commission (CERC) has approved NHPC’s discovered tariff of ₹3.13/kWh for 1,200 MW of interstate transmission system (ISTS)-connected solar projects with 600 MW/2,400 MWh of energy storage systems (ESS).

However, it only partially allowed an additional 360 MW of capacity under the greenshoe option.

The Commission also approved a trading margin of ₹0.07 (~$0.00075)/kWh, subject to the provision of an escrow arrangement or an irrevocable, unconditional, and revolving letter of credit to the solar power generators.

Background

In March 2025, the petitioner, NHPC, issued a tender to set up 1,200 MW of ISTS-connected solar projects, with 600 MW/2,400 MWh of ESS, and a greenshoe option for an additional 1,200 MW.

The projects were to be set up in Rajasthan, Telangana, Maharashtra, Karnataka, Gujarat, Madhya Pradesh, and Andhra Pradesh.

NHPC received 15 bids for the tender, with 14 qualifying for the e-reverse auction. It discovered a tariff of ₹3.13 (~$0.033)/kWh for the full 1,200 MW solar capacity. The selected bidders after the e-reverse auction were Reliance Infrastructure, securing a capacity of 390 MW, JBM Renewables (150 MW), PNC Infratech (300 MW), SAEL Industries (300 MW), and Navayuga Engineering (60 MW).

These companies secured 195 MW/780 MWh, 75 MW/300 MWh, 150 MW/600 MWh, 150 MW/600 MWh, and 30 MW/120 MWh of storage capacities, respectively.

Navayuga and SAEL were awarded 440 MW and 300 MW, respectively, under the greenshoe option at the same tariff.

NHPC filed a petition with the Commission seeking approval of the discovered tariffs and a trading margin of ₹0.07 (~$0.00075)/kWh.

The petitioner submitted that its bidding process was transparent and competitive, and that the discovered tariff is reasonable and market-aligned when compared to recent CERC-approved tariffs ranging from approximately ₹3.25 (~$0.035)/kWh to ₹3.49 (~$0.035)/kWh.

On allocating additional capacity under the greenshoe option, the petitioner argued that since a competitive tariff was discovered, allocating additional capacity under the greenshoe option allowed procurement of more renewable power at the same rate. This would help renewable energy implementing agencies meet the Ministry of New and Renewable Energy targets.

Commission’s Analysis

The Commission observed that the tariff was discovered through a competitive bidding process, was reasonable, and aligned with market trends.

CERC noted that, while the greenshoe option had the same structure and terms as those in the original bidding process, it was not explicitly provided for under the existing bidding guidelines. It noted that continued use of such allocation without formal regulatory backing may be inconsistent with Section 63 of the Electricity Act, 2003, which mandates that tariff discovery occur strictly through guideline-compliant competitive bidding.

The Commission restricted the additional capacity allocated to SAEL and Navayuga to 300 MW and 60 MW, respectively.

It approved the discovered tariff of ₹3.13 (~$0.033)/kWh for the originally tendered and the allotted capacity under the greenshoe option.

The Commission also approved the trading margin of ₹0.07 (~$0.00075)/kWh.

However, it directed the petitioner to provide an escrow arrangement or a letter of credit to the solar power generators. Failure to provide these facilities will result in a restricted trading margin of ₹0.02 (~$0.00021)/kWh.

This March, CERC adopted a tariff of ₹3.19 (~$0.0339)/kWh discovered by SJVN for 1,200 MW of interstate transmission system-connected wind-solar hybrid power projects.

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