CERC Approves Tariff For 1530 MW Renewable Energy Procurement By NTPC

Posted On - 13 March, 2025 • By - Sagar Agrawal

Summary

The Central Electricity Regulatory Commission (CERC) approved tariffs for a 1,530 MW wind-solar hybrid power project, discovered through a competitive bidding process conducted by NTPC Limited. The tariffs range from ₹4.64/kWh to ₹4.73/kWh, with the commission affirming the transparency of the bidding process under Section 63 of the Electricity Act, 2003. The order also conditionally approved a trading margin of ₹0.07/kWh, subject to compliance with payment security mechanisms.

Case Timeline

  • 31.10.2023: NTPC floated the tender for 3,000 MW ISTS-connected renewable energy projects.
  • 15.03.2024: Standing Tender Committee shortlisted 10 bidders with a cumulative capacity of 1,980 MW.
  • 22.03.2024: e-Reverse Auction conducted, finalizing tariffs.
  • 22.04.2024: Letters of Award (LOAs) issued to seven developers for 1,530 MW.
  • 25.07.2024: First hearing; CERC directed NTPC to submit compliance details.
  • 29.08.2024: Second hearing; NTPC sought additional time for submissions.
  • 09.09.2024: Final hearing; CERC noted no objections from respondents.
  • Order Date: Disposed in 2024 (exact date unspecified).

Issue Raised

The petition sought adoption of tariffs discovered through competitive bidding for 1,530 MW of hybrid renewable energy projects under Section 63 of the Electricity Act, 2003. A secondary issue was the approval of a trading margin of ₹0.07/kWh for NTPC.

Appellant’s Arguments (NTPC)

  1. Transparent Bidding Process: The tariff was discovered through an international competitive bidding process, adhering to Ministry of Power guidelines (09.06.2023).
  2. Compliance with Guidelines: A Bid Evaluation Committee certified the process as fair and reasonable.
  3. Public Interest: The tariffs (₹4.64–₹4.73/kWh) are competitive and beneficial for procurers and consumers.
  4. Trading Margin Justification: Requested ₹0.07/kWh margin, citing long-term back-to-back agreements with distribution companies.

Respondents’ Arguments

No formal replies were filed by the seven respondents despite notices. The absence of objections implied tacit agreement with NTPC’s submissions.

Order

  1. Tariff Adoption: CERC approved tariffs under Section 63, validating the competitive process. The adoption is contingent on NTPC finalizing Power Purchase Agreements (PPAs) and Power Sale Agreements (PSAs).
  2. Trading Margin: Approved ₹0.07/kWh margin, but capped at ₹0.02/kWh if NTPC fails to provide escrow/revolving credit mechanisms to generators.
  3. Compliance Directive: NTPC must submit executed PPAs/PSAs or report delays to CERC.

Analysis

  1. Competitive Bidding Success: The auction attracted 10 bidders, ensuring market-driven tariffs. The “bucket filling” method prioritized lower tariffs, aligning with renewable energy cost reduction trends.
  2. Regulatory Compliance: CERC emphasized strict adherence to guidelines, reinforcing trust in public procurement processes.
  3. Conditional Approvals: Linking tariff adoption to PPA finalization ensures accountability, while the trading margin cap safeguards generators against payment risks.
  4. Renewable Energy Growth: The project advances India’s goal of 500 GW renewable capacity by 2030, integrating hybrid systems with energy storage for grid stability.

https://cercind.gov.in/2025/orders/226-AT-2024.pdf