CERC Approves Tariff for SECI’s 1000 MW Solar Project (Tranche XII), Boosting India’s Renewable Energy Capacity

Posted On - 3 July, 2024 • By - King Stubb & Kasiva

Summary

The Central Electricity Regulatory Commission (CERC) has recently issued an order approving the tariff for a significant solar power project in India.[1] The Solar Energy Corporation of India Limited (SECI) initiated a petition for the adoption of a tariff for 1000 MW of solar power projects under Tranche XII. This project is a major step towards expanding India’s solar power capacity connected to the Inter-State Transmission System (ISTS). The CERC order details the competitive bidding process, the selection of successful bidders, and the final tariff adoption, all under the guidelines issued by the Ministry of Power in 2023.

Case Timeline

  • 13th October 2023: SECI released a detailed Request for Selection (RfS) for the solar projects. This RfS included comprehensive documents like the Standard Power Purchase Agreement (PPA) and Power Sale Agreement (PSA), essential for the bidding and project development process.
  • 20th December 2023: A crucial milestone was reached when the financial bids were opened, and an e-reverse auction was conducted to ensure competitive pricing and select the most qualified bidders.
  • 1st January 2024: SECI formally issued Letters of Award (LoAs) to the successful bidders, marking a significant step towards the realization of the project.
  • 7th February 2024: To ensure the distribution of the generated power, a comprehensive Power Sale Agreement (PSA) was signed with Uttar Pradesh Power Corporation Limited (UPPCL), covering the entire 1000 MW capacity.
  • 20th January 2024: SECI filed a formal petition with the CERC for the adoption of the tariff discovered through the competitive bidding process.
  • 1st June 2024: CERC issued a comprehensive order, meticulously detailing the approval of the tariff and associated matters.

Issue Raised

The central issue in this case was the adoption of a fair and just tariff for the 1000 MW solar power projects under Tranche XII. This tariff was determined through a transparent and competitive bidding process, as mandated by the Solar Guidelines of 2023. The case aimed to address not only the tariff adoption but also the approval of a trading margin of Rs. 0.07/kWh, which is a fee paid by the buying entities to SECI for facilitating the power purchase.

Appellant’s Arguments

SECI, the appellant in this case, presented a robust defense of their adherence to the prescribed bidding process. They emphasized the transparency of the e-reverse auction and the meticulous selection of successful bidders based on the lowest tariffs offered. Additionally, SECI provided a detailed explanation for the minor delay in approaching the CERC for tariff adoption, attributing it to the necessity of executing the Power Purchase Agreements (PPAs) and Power Sale Agreements (PSAs) before the tariff could be finalized.

Respondent’s Arguments

In this particular case, the respondents did not file any formal replies to SECI’s petition, indicating their acceptance of the bidding process and the resulting tariff.

Order

The CERC order represents a thorough analysis of SECI’s submissions and the evidence presented. The commission concluded that the entire bidding process, including the tariff discovery, was carried out in a transparent and compliant manner, adhering to the Solar Guidelines of 2023. As a result, the CERC approved the individual tariffs for each successful bidder, aligning with the terms specified in the PPAs and the PSA with UPPCL. The trading margin of Rs. 0.07/kWh was also granted approval, with the caveat that it would be reduced to Rs. 0.02/kWh if SECI failed to fulfill its obligation of providing the necessary payment security mechanisms.

Analysis

The CERC’s order in this case underscores the growing importance of competitive bidding processes in India’s burgeoning renewable energy sector. By upholding transparency and strict adherence to guidelines, the commission ensures a fair and equitable environment for all stakeholders involved. This, in turn, fosters the development of solar power projects at increasingly competitive tariffs. The successful implementation of the 1000 MW solar project under Tranche XII is not only a significant achievement in itself but also a promising indicator of India’s unwavering commitment to its renewable energy targets and its determination to reduce its carbon footprint. This project is a testament to the nation’s proactive approach to addressing climate change and transitioning towards a sustainable energy future.

[1] https://cercind.gov.in/2024/orders/68-AT-2024.pdf