CERC Proposes Auctioning Unused Transmission Connectivity for Stalled Renewable Projects

Introduction

In a significant regulatory development this month, the Central Electricity Regulatory Commission (CERC) released a staff paper proposing a complete overhaul of the way transmission connectivity is allocated to renewable energy projects in India. The initiative responds to the growing mismatch between committed grid capacity and actual project execution, which has resulted in large blocks of transmission infrastructure lying idle. With India targeting 500 GW of non-fossil capacity by 2030, CERC’s proposals mark a major step toward tightening accountability in the clean-energy pipeline and ensuring efficient utilisation of scarce grid resources.

Explanation

According to the staff paper, nearly 31.8 GW of transmission connectivity remains unused even though it had been allocated on the basis of Letters of Award (LoAs). These projects have failed to progress because developers have not executed Power Purchase Agreements (PPAs), a prerequisite for financial closure and construction. At the same time, close to 50 GW of renewable projects remain stranded without buyers, largely due to weak demand from state distribution companies.

This has resulted in a peculiar bottleneck:

• Idle transmission slots are locked by non-moving projects, while
• Ready-to-build or faster-moving projects cannot access the network, slowing down the country’s renewable-energy rollout.

To address this, CERC has proposed a multi-pronged reform package.

1. Conversion to Land-based Route with Tighter Timelines

Developers whose PPAs are delayed by more than 12 months may shift to a land-based connectivity route, but with stricter milestone obligations.

2. Performance Guarantees

CERC suggests mandatory performance guarantees to discourage speculative blocking of transmission capacity and ensure only committed players hold connectivity rights.

3. Swap or Surrender Options

Developers may be permitted to:

• Swap LoAs for PPAs from other projects, or
• Exit and surrender unused connectivity.

Connectivity given up through this process would be re-auctioned, ensuring it goes to developers capable of fast-tracking commissioning.

4. Future Connectivity Through Auctions

Recognising that transmission access is a “scarce resource,” CERC proposes that future connectivity should either:

• Require executed PPAs at the application stage, or
• Be allocated solely through auctions, ensuring transparent competition and timely project execution.

The regulator has invited stakeholder comments, reflecting the broader sectoral shift toward results-based allocation of infrastructure rights.

5. Context and Sectoral Impact

India’s transmission network approximately 495,000 circuit kilometres is failing to expand at the pace required to integrate new renewable capacity. The pressure on the grid has prompted regulators to prioritise connectivity for projects that are operational or nearing completion. In fact, as reported earlier, India cancelled grid access for nearly 17 GW of delayed projects in September 2025.

The staff paper suggests a move from a liberal, award-based connectivity system to a performance-driven, contractually binding mechanism that aligns financial commitments, grid availability, and renewable-energy commissioning timelines.

Conclusion

CERC’s proposal signals an important realignment in India’s renewable-energy regulatory landscape. With the approaching 2030 targets, transmission capacity must be viewed as a scarce national resource that should be assigned to real and market-ready projects. Addressing idle connectivity, implementing performance guarantees, and restricting future access through Power Purchase Agreements (PPAs) can reduce execution risk, mitigate speculative project development, and unlock stranded capacity.

For developers, this implies enhanced scrutiny and compliance obligations, while for operational projects it promises quicker access to grid infrastructure. Overall, the proposal seeks to enable a more orderly and demand-driven expansion of India’s renewable-energy sector.