The Central Electricity Regulatory Commission (CERC) has approved tariffs discovered through competitive bidding for NTPC’s procurement of 1,250 MW power from grid-connected solar power projects under the “Program for Flexibility in Generation and Scheduling of Thermal/Hydro Power Stations through Bundling with Renewable Energy and Storage Power.”

Three successful bidders were selected by NTPC – Solairedirect Energy (ENGIE) for 300 MW at ₹2.55 (~$0.031)/kWh, ReNew Solar Power for 400 MW at ₹2.55 (~$0.031)/kWh, and NTPC Renewable Energy (NTPC REL) for 550 MW at ₹2.56 (~$0.031)/kWh.

Background

NTPC filed a petition under Section 63 of the Electricity Act, 2003 for tariff adoption for 1,250 MW grid-connected solar photovoltaic power projects. It requested CERC to adopt the tariffs of ₹ 2.55 (~$0.031)/kWh, ₹ 2.55 (~$0.031)/kWh, and ₹ 2.56 (~$0.031)/kWh from Solairedirect, ReNew Power, and NTPC REL, respectively, as discovered through bidding conducted by REC Power Development and Consultancy (RECPDCL) on behalf of the petitioner.

On December 2, 2022, NTPC issued a request for proposal to select solar power developers for setting up 1,250 MW grid-connected solar power projects in India under the Flexibility program.

In response, nine bids were received, with eight bidders meeting qualification requirements. Six bidders were shortlisted for an e-reverse auction, resulting in the three respondents securing letters of award on July 28, 2023.

The commissioning date for the project’s full capacity was 18 months from the power purchase agreement’s (PPA) signing date once the tariff is approved by CERC.

The case was first heard by CERC on September 20, 2023.

NTPC was then instructed to include beneficiaries of thermal generating stations affected by the 1,250 MW solar power, along with RECPDCL, with replies requested from all respondents. Further directives on furnishing details including relevant tariff, consent from beneficiaries, and status of PPAs were given on September 20, with RECPDCL instructed to affirm compliance with Flexibility Guidelines in bid documents.

The respondents raised their respective objections to the ongoing tariff adoption proceedings initiated by the petitioner.

West Bengal State Electricity Distribution Company (WBSEDCL) said that the flexibility program allows NTPC to include additional costs beyond the competitive bidding tariff for supplying renewable energy power to beneficiaries, constituting a trading transaction as defined in Section 2(71) of the Act, involving the purchase of electricity for resale.

NTPC asserted that the concerns raised by the respondents lack legal merit.

Commission’s Analysis

On the issue of lack of prior consent from beneficiaries, the Commission noted that neither the flexibility program nor the guidelines require such prior consent. The Commission directed NTPC to take up with the Ministry of Power to amend the guidelines on this aspect.

Regarding the contention that the transaction amounts to “trading,” which is impermissible under the Act, the Commission held that it cannot go into the details of the guidelines in the present adoption proceedings under Section 63. The aggrieved parties are free to challenge the relevant provisions before an appropriate forum.

Concerning the various operational aspects raised by respondents, the Commission did not delve into them, observing that they need not be necessarily linked to the tariff adoption proceedings. Instead, it directed the Central Electricity Authority to undertake joint consultation with all stakeholders on the implementation and operational aspects as per the provisions of the flexibility program.

Earlier this month, CERC approved tariff for Solar Energy Corporation of India’s 1200 MW wind projects and said that the increase in GST rates on renewable energy devices, following the Ministry of Finance’s notification post-July 6, 2021, was a Change in Law event.

Last month, CERC formulated the draft regulations to determine the tariff for renewable energy projects in 2024.

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