The Central Electricity Regulatory Commission (CERC) has dismissed a petition filed by SJVN seeking approval to allot 316 MW of unallocated renewable energy capacity under the greenshoe option in a firm-and-dispatchable renewable energy tender.

The Commission concluded that neither the Ministry of Power’s competitive bidding guidelines nor the tender documents provided any mechanism for allocating residual capacity under the greenshoe option after completion of the bidding process.

Background

SJVN issued a tender in June 2023 to procure 1,500 MW of firm and dispatchable renewable energy from interstate transmission system (ISTS)-connected projects with energy storage systems.

The tender included provisions for a capacity cap under which only 80% of the cumulative technically qualified bids could be awarded if total bids were below 1,500 MW.

In August 2023, SJVN amended the tender to include a greenshoe option, allowing the procurement of an additional 1,500 MW of power at the lowest discovered tariff. The greenshoe capacity was to be offered only to successful bidders willing to execute power purchase agreements at the lowest tariff. It was to be allocated proportionately based on the capacity awarded in the reverse auction.

Following the bidding process, seven bidders emerged successful. Against cumulative bids of 1,480 MW, SJVN awarded 1,184 MW under the base capacity in line with the 80% cap. Under the greenshoe option, another 1,184 MW was allocated proportionately to the same bidders at a tariff of ₹4.38 (~$0.049)/kWh. The Commission subsequently adopted this tariff in a separate order.

However, after allocating greenshoe capacity proportionately, a balance of 316 MW remained unallocated. Several successful bidders, including ACME Cleantech Solutions and Hero Solar Energy, expressed willingness to take additional capacity at the same tariff.

SJVN argued that allocating the remaining capacity to existing bidders would be in the public interest, as it would avoid delays and higher costs associated with issuing a fresh tender. SJVN also noted demand from distribution companies for additional renewable power to meet their renewable purchase obligations.

SJVN sought clarification from the Ministry of New and Renewable Energy on whether the remaining greenshoe capacity could be allocated. The ministry responded that it had no comments and advised SJVN to take an appropriate decision, strictly in accordance with the bidding guidelines and tender conditions, while ensuring transparency and avoiding post-tender deviations.

ACME Cleantech Solutions supported SJVN’s position. It argued that the greenshoe provisions did not prohibit the allocation of the remaining capacity and that the 80% cap applied only to the original award under the reverse auction, not to the greenshoe option.

ACME further contended that the Commission had jurisdiction to examine the allocation of greenshoe capacity as part of its broader regulatory role.

Commission analysis

The Commission framed the central issue as whether the remaining 316 MW of unallocated Greenshoe capacity could be awarded to successful bidders in terms of the bidding documents and the Ministry of Power guidelines.

It noted that the competitive bidding guidelines clearly restrict deviations from prescribed procedures and require any such deviation to be approved by the appropriate government before initiation of the bidding process.

The guidelines also specify that disputes involving tariff determination or tariff-related matters fall within the Commission’s adjudicatory jurisdiction, while all other disputes are to be resolved through arbitration mechanisms established by the government.

On examining the tender document, the Commission found that the provisions governing capacity awards under the reverse auction clearly capped eligible capacity at 80% of cumulative bids when cumulative bids were below the tendered capacity.

The Commission further observed that the greenshoe option allowed allocation of additional capacity only in proportion to the capacity awarded in the reverse auction and only to successful bidders willing to accept the lowest tariff.

Crucially, the Commission found that neither the tender nor the Ministry of Power guidelines contained any provision allowing allocation of unallocated greenshoe capacity after the proportional allocation had been completed.

The Commission observed that once the bidding process had concluded and the tariff had been adopted, the procurement exercise stood completed.

The Commission then examined whether it could invoke its general regulatory powers to permit such allocation. Relying on multiple previous judgements, the Commission held that its regulatory powers are not plenary and cannot be used to rewrite contracts, alter bidding outcomes, or introduce post-tender modifications that are not contemplated in the bid documents or guidelines.

The Commission emphasized that, while it retains regulatory authority in areas not covered by guidelines, it cannot exercise that authority to amend express provisions of bidding documents or to create new rights or obligations after the bidding process has concluded.

Since the issue did not involve tariff determination and did not arise from any ambiguity requiring tariff regulation, the Commission concluded that it lacked jurisdiction to grant the relief sought.

Based on this reasoning, the Commission held that SJVN’s request to allocate the remaining 316 MW of greenshoe capacity could not be accepted.

In a similar order, CERC did not allow NHPC to fully exercise the 1.2 GW greenshoe option, holding that allocating 750 MW to a single bidder raised transparency concerns. The Commission capped the greenshoe allocation at 350 MW and noted that the greenshoe option is not defined in the central bidding guidelines, directing implementing agencies to seek clarity from the Ministry of Power, including on capping surplus greenshoe capacity at 50% of the original allocation when other bidders decline additional capacity.

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