Gujarat Electricity Regulatory Commission (GERC) Approves Flexible Connectivity Rights for Wind-Solar Hybrid Projects in Gujarat

Summary

The Gujarat Electricity Regulatory Commission (GERC) has approved amendments allowing flexible connectivity rights for wind-solar hybrid power projects in Gujarat.[1] This change, brought forward by the Gujarat Energy Transmission Corporation Limited (GETCO), aims to resolve issues related to the non-transferability of connectivity among renewable energy (RE) project developers and RE park developers, facilitating smoother project implementation and increased efficiency in resource utilization.

Case Timeline

• 07.01.2023: Existing procedures for granting connectivity to renewable energy projects were established, prohibiting the transfer of connectivity rights once granted.
• 22.02.2024: GERC issued Order No. 1 of 2024, continuing the restriction on the transfer of connectivity for renewable projects, including wind-solar hybrid projects.
• 21.09.2024: GETCO filed a petition seeking amendments to the existing order to enable flexibility in transferring connectivity rights.

Issue Raised

The primary issue raised by GETCO was the restriction on the transfer of connectivity rights for wind-solar hybrid projects, which limited the effective use of transmission infrastructure. The existing framework required individual projects to obtain connectivity in their own names, even when the projects were developed by RE park developers for multiple smaller entities. This led to underutilization of transmission capacity, increased costs, and difficulties in project development.

Appellant’s Arguments

1. GETCO’s Position:
   • The appellant argued that allowing the transfer of connectivity would benefit developers who aggregate multiple projects and help avoid the duplication of transmission lines.
   • The existing rules were seen as restrictive, especially for developers who establish RE projects on behalf of other entities and later transfer them for operation.
   • It was emphasized that restricting connectivity transfers led to inefficiencies in the renewable energy sector, particularly in Gujarat, which aims to be a leading renewable energy state.
   • The policy misalignment between the Government of Gujarat’s Renewable Energy Policy 2023 and the GERC order was highlighted. The policy explicitly allowed for the transfer of project ownership, while the GERC order did not.

Respondent’s Arguments

• Distribution Licensees (Respondents 1-4): The distribution licensees mainly argued that allowing connectivity transfers could lead to unregulated trading of connectivity rights and potential misuse. They emphasized that ensuring transparency and fairness in allocating connectivity was crucial.
• Objectors:
  • Various stakeholders raised concerns about the potential for larger developers to dominate connectivity rights, thereby marginalizing smaller consumers and independent power producers.
  • Some objectors suggested that the changes should apply only to new projects rather than retroactively, as retrospective amendments could disrupt existing contractual commitments.

Judgment

The GERC accepted GETCO’s request to amend the current framework and introduced new provisions under Clause 3.10(c) of Order No. 1 of 2024 and Clause 4.5 of the Procedure for Grant of Connectivity. These provisions allow:

1. Transfer of Connectivity Rights: RE project developers and RE park developers can transfer connectivity to individual project entities once the development stage is complete. This aims to maximize the use of existing infrastructure.
2. Developer Model Recognition: The amendments formally recognize the developer model as a legitimate mechanism for the development of RE projects in Gujarat, addressing the concerns raised by many stakeholders.
3. Retroactive Application: The judgment allows amendments to apply retroactively, facilitating the continuation of projects that were in progress but affected by previous restrictions.

Analysis

The GERC’s decision to approve flexible connectivity rights represents a crucial policy shift, supporting the growth and efficiency of renewable energy projects in Gujarat. By allowing connectivity transfers, the commission has acknowledged the problems involved in developing large-scale hybrid power projects and the necessity for a more adaptable approach. This decision:

• Promotes Efficiency: The flexible connectivity model will lead to better utilization of the existing transmission infrastructure, avoiding underutilization and reducing the need for multiple transmission lines.
• Supports Smaller Entities: By removing barriers for smaller industries and MSMEs, the new framework levels the playing field, enabling more participants to contribute to renewable energy development.
• Aligns with Government Policy: The amendment aligns with the Gujarat Renewable Energy Policy 2023, promoting consistency between government policies and legal regulations.

Despite these advantages, challenges remain, including ensuring that connectivity rights are not misused through speculative trading. Clear implementation guidelines and monitoring will be necessary to ensure that the flexibility granted serves its intended purpose—boosting renewable energy capacity in the state while maintaining fairness and efficiency in connectivity allocation.

The decision sets a precedent that other states might consider, particularly as they seek to balance the growth of renewable energy with efficient infrastructure usage. By creating an enabling environment for wind-solar hybrid projects, GERC is paving the way for Gujarat to further solidify its position as a leader in renewable energy.

[1] https://gercin.org/wp-content/uploads/2024/09/Final-Order-2377-2024.pdf