In its order, CERC stated, “Keeping in view the fact that the creation of an SPV is an option under the request for selection (RfS) issued by the Solar Energy Corporation of India (SECI) and that a number of companies are executing projects through the creation of 100 percent subsidiaries after winning the bids, we are of the view that 100 percent subsidiary companies should be allowed to utilize connectivity granted to the parent company.”
Keeping in view that the grant of such a connection can be utilized to generate profits, CERC also stated that in order to prevent the potential trading of connectivity, “We are of the view that any sale of shares in the subsidiary company or subsidiaries will only be allowed after one year has passed from the commencement of supply of power from the SPV. In cases where there is more than one SPV, the lock-in period will apply from the commencement of the supply of power from the last SPV. Further, in such cases, the parent company will act as the principal generator and undertake all operational and commercial responsibilities for the renewable energy generating station(s).”
In cases where a parent company wishes to exit and hand its connectivity/long-term access (LTA) over to its SPVs, one of the SPVs will have to take over as a lead generator and assume responsibility for all activities.
For SECI’s 1,000 MW wind tender, Inox Wind quoted a tariff of ₹3.46 (~$0.051)/kWh and won the bid to develop 250 MW of wind projects in February 2017.
Per the RfS issued by SECI, a parent company is allowed to form SPVs to execute projects. On January 9, 2017, Inox Wind submitted bids to set up five wind power projects of 50 MW each near Dayapar, Kutch in Gujarat. SECI issued a letter of acceptance (LOA) on April 5, 2017.
Inox Wind then went on to form five wholly owned SPVs, namely, Renergy Pvt. Ltd, Wind Two Renergy Pvt. Ltd, Wind Three Renergy Pvt. Ltd, Wind Four Renergy Pvt. Ltd, and Wind Five Renergy Pvt. Ltd.
PGCIL had initially provided Inox Wind with LTA for 500 MW, but when it was informed that the LTA would be granted to SPVs, PGCIL in a letter dated August 1, 2017, stated, “Unlike solar power projects, there is no provision of ‘developer’ for a wind generation project in the connectivity regulations, only a developer can utilize LTA, not its subsidiaries.”
As a result, Inox Wind’s SPVs could not avail themselves of the granted connectivity and LTA for transferring power due to the existing regulatory mechanism. Hence, Inox Wind petitioned CERC to intervene.
Image credits: Inox