JSA Prism | Electricity and Power

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Central Electricity Regulatory Commission issues mechanism for treatment of connectivity granted under the General Network Access regulations where the power purchase agreement is not signed within twelve months

The Central Electricity Regulatory Commission (“CERC”), vide Order dated July 10, 2026 in Petition No. 11/SM/2026 (“Order”), has issued a mechanism for treatment of connectivity granted under the CERC (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2022, as amended (“GNA Regulations”), based on Letters of Award (“LoAs”) issued by Renewable Energy Implementing Agencies (“REIAs”), where corresponding Power Purchase Agreements (“PPAs”) have not been signed within 12 (twelve) months from the date of issuance of the LoA.

The Order is a one-time optional measure, exercising powers under Regulation 41 (Power to Relax) and Regulation 44 (Suo Motu Orders) of the GNA Regulations, intended to release approximately 15.7 (fifteen point seven) GigaWatt (“GW”) of stranded transmission connectivity capacity blocked by legacy LoAs that have not culminated into PPAs and to improve the utilisation of scarce inter-state transmission infrastructure.

The Order provides 4 (four) options to eligible entities:

Options I, II and III: One-time optional exit or conversion mechanisms for entities holding LoA-based connectivity where PPAs remain unsigned; and
Option IV: Continuation under the extant GNA Regulations (intimation to Central Transmission Utility of India Limited (“CTUIL”) or as default outcome for entities that do not elect an option within the prescribed timeline).

Salient features

Scope, applicability and election timeline

Scope of the Order: The Order covers entities that: (a) have been issued in-principle or final grant of connectivity based on an LoA under clause (a) of Regulation 5.8(xi) of the GNA Regulations; or (b) held stage-II connectivity under the CERC (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters) Regulations, 2009, based on an LoA and transitioned to the GNA Regulations; or (c) were granted connectivity under Clause (b)/(c) of Regulation 5.8(xi) of the GNA Regulations and converted to an entity under Clause 5.8 (xi) (a) of the GNA Regulations, in each case where PPAs have not been signed (in full or in part) more than 12 (twelve) months after issuance of the LoA. The Order covers LoAs issued between January 1, 2019 and May 31, 2025 by Solar Energy Corporation of India, National Thermal Power Corporation, National Hydroelectric Power Corporation and Satluj Jal Vidyut Nigam.
Publication of eligible entities list: REIAs must furnish to the CTUIL a list of LoAs (per Appendix-A format) within 7 (seven) days of issuance of the Order. CTUIL must publish a provisional list within 7 (seven) days of receiving REIA data, allow entities 7 (seven) days to seek corrections, and publish a final list within 5 (five) days thereafter.
Election timeline: Entities on the final list must elect one of the Options I, II or III within 60 (sixty) days of publication of the final list, failing which the entity is deemed to have elected Option IV and loses the right to exercise any option under the Order.
REIA No Objection Certificate (“NOC”): The Order prescribes an NOC from the concerned REIA as an eligible document for exercising Options I, II and III. The REIA must process the NOC request within 15 (fifteen) days, either issuing the NOC or rejecting it with recorded reasons.

Options I, II, III, IV and auction mechanism

Option I – Exit from the LoA route without surrendering connectivity: An entity may apply to CTUIL with: (a) an NOC from the concerned REIA certifying non-signing of the PPA; and (b) a Performance Bank Guarantee (“PBG”) of INR 8,00,000 (Indian Rupees eight lakh)/MegaWatt (“MW”). A fresh Scheduled Commercial Operation Date (“SCOD”) of up to 24 (twenty-four) months from intimation of CTUIL’s acceptance or the firm start date of connectivity, whichever is later, will apply, with no change to the firm start date of connectivity already issued to the entity as on the date of the Order. Where 12 (twelve) months have not yet elapsed since issuance of the LoA, an entity may still exercise Option I if the concerned REIA permits early exit and issues an NOC. The entity must submit land documents by the later of 12 (twelve) months from the revised CTUIL’s intimation or 9 (nine) months from communication of tentative substation coordinates. The entity must achieve financial closure by the later of 18 (eighteen) months from the revised CTUIL’s intimation or the timeline under Clause (2) of Regulation 11A of the GNA Regulations, whichever is later. Existing Connectivity Bank Guarantee (“Conn-BG”) remain valid; CTUIL returns it on declaration of Commercial Operation Date (“COD”) and thereafter returns the PBG 1 (one) year after COD. If the entity fails to meet the milestones, CTUIL will revoke connectivity under the GNA Regulations and encash the PBG, with treatment of Conn-BGs under Regulation 24.3 and 24.4 of GNA Regulations.
Option II – Substitution of LoA with a PPA signed under another LoA: An entity may substitute the LoA on which connectivity was obtained (“LoA1”) with a PPA signed under another LoA (“LoA2”), which may be held by the same entity, its subsidiary (as defined under the Companies Act, 2013), its parent, or another subsidiary of the same parent. SCOD to be considered as per the substituted PPA but capped at 30 (thirty) months from the date of conversion. If the PPA’s contracted capacity is lower than the LoA1 connectivity quantum, the balance must be converted under Option I and II or Option III, failing which it is deemed surrendered under Option III. If the PPA’s contracted capacity is higher than the LoA1 connectivity quantum, substitution is permitted only up to the LoA1 quantum, and the entity must separately apply to CTUIL within 30 (thirty) days of the revised grant to convert the connectivity originally granted under LoA2/PPA into Option I or Option III, failing which it is deemed surrendered under Option III with return of Conn-BGs. Multi-located projects are eligible. The entity must also submit financial closure documents under Clause (2) of Regulation 11A of the GNA Regulations. CTUIL must issue a revised grant within 2 (two) months of completion of the month in which the complete application was received. This substitution is available only as a one-time exercise. The original LoA1 becomes invalid for obtaining any other connectivity or for converting from the Land or Land BG route to the LoA route.
Option III – Surrender of connectivity with return of Conn-BGs: An entity may apply to CTUIL to surrender part or full quantum of connectivity (minimum converted quantum of 50 (fifty) MW for balance under Options I or II). Such application requires an NOC from the concerned REIA, except in the case of a deemed surrender under the Order, where no NOC is required. CTUIL must issue closure within 15 (fifteen) days of completion of the month in which the complete application was received. CTUIL returns Conn-BGs within 30 (thirty) days of closure or clearing of dues, whichever is later. Further, CTUIL will return all Conn-BGs in the event of a full surrender, and proportionate Conn-BG2 and Conn-BG3 for a partial surrender.
Option IV – Continue under the GNA Regulations: An entity may elect to remain governed by the extant GNA Regulations by intimating CTUIL within the 60 (sixty)-day election window. This is also the deemed outcome for entities making no election within that window.
Treatment of connectivity freed up under Option III: Within 1 (one) month of surrender, CTUIL will first offer the surrendered capacity to existing grantees in the same substation cluster at a fixed base price (INR 3 (three) lakh/MW). An entity accepting the offer must pay the base price within 15 (fifteen) days of acceptance, failing which CTUIL will put the capacity up for open auction using an ascending or increasing price-bid format. CTUIL must conduct the auction within 2 (two) months of conclusion of the reallocation exercise. For the auction, two windows apply: (a) where the substation and inter-State Transmission System (“ISTS”) augmentation have both achieved COD, the SCOD of the auctioned project must not exceed 18 (eighteen) months from the date of award; and (b) where either or both of the substation and corresponding ISTS augmentation are yet to achieve COD, the SCOD must not exceed 24 (twenty-four) months from the date of award or the firm start date of connectivity, whichever is later. Bidders must submit a non-refundable bid application fee of INR 5,00,000 (Indian Rupees five lakh) (plus applicable taxes) and an earnest money deposit of INR 15,000 (Indian Rupees fifteen thousand)/MW (5% of the base price). The successful bidder must furnish a PBG of INR 30,000 (Indian Rupees thirty thousand)/MW (10% of the base price). Common conditions include as follows: (a) the connectivity agreement must be signed within 1 (one) month of award, CTUIL intimates connection details within 15 (fifteen) days of receipt of the PBG; (b) milestones are eligible for extension on payment of applicable compensation charges. If the successful bidder fails to meet the milestones, CTUIL will revoke the connectivity and encash the PBG.

Conclusion

The Order marks a pragmatic, one-time intervention that directly addresses a major bottleneck in India’s renewable energy sector by unlocking approximately 15.7 (fifteen point seven) GW of stranded ISTS connectivity previously blocked by legacy LoAs that failed to convert into PPAs. For developers holding such connectivity, it offers much-needed flexibility through optional exit, substitution, or surrender routes, enabling them to either retain projects with fresh milestones and bank guarantees or exit cleanly with return of the Conn-BGs. This reduces regulatory uncertainty and improves bankability. New and viable renewable energy projects stand to benefit significantly as freed capacity is first reallocated within clusters and then auctioned transparently, accelerating access to scarce transmission infrastructure. The mechanism also promotes efficient resource allocation by curbing speculative holding of connectivity while ensuring that auction proceeds help lower transmission charges for distribution companies and consumers.

This Prism is prepared by: