The Central Electricity Regulatory Commission (CERC) has announced a one-time framework that could unlock nearly 16 GW of stalled renewable energy projects by enabling developers to either repurpose, surrender, or substitute connectivity obtained through legacy Letters of Award (LoAs). This is a significant step aimed at easing India’s growing transmission bottleneck.
The order addresses a long-standing issue in the renewable sector, where developers secured interstate transmission system (ISTS) connectivity based on LoAs issued by Renewable Energy Implementing Agencies (REIAs) such as SECI, NTPC, NHPC, and SJVN, but failed to sign power purchase agreements (PPAs) due to delays in corresponding power sale agreements (PSAs) with distribution companies.
According to data analysed by the regulator, REIAs issued LoAs aggregating 40.42 GW between 2019 and June 2025. However, PPAs have materialised for only 2.34 GW of this capacity. Connectivity linked to projects lacking PPAs currently stands at 22.05 GW, of which around 6.35 GW faces transmission planning constraints. This leaves nearly 15.7 GW of connectivity that could potentially be released or better utilised under the new framework, CERC said.
The regulator noted that several factors contributed to older LoAs failing to translate into PPAs, including lower demand from discoms, declining renewable tariffs in newer bids, increasing preference for round-the-clock and peak power products, and concerns over projects whose connectivity timelines extend beyond December 2028.
This has resulted in a situation where newer projects with signed PPAs are unable to obtain transmission connectivity because substantial ISTS capacity remains blocked by projects that have made little progress.
For developers, there are four choices. The new system allows developers four choices available to those who have not had PPAs for more than a year: By providing further performance assurances and updated commissioning schedules, the first alternative enables developers to leave the LoA route without giving up connectivity, thereby transferring projects to a land-based route. In order to maintain connectivity rights, the second approach allows developers to replace the original LoA with another signed PPA, including those obtained by a parent firm or subsidiary. Given that current regulations demand the encashment of guarantees upon relinquishment, the third option provides developers with the opportunity to voluntarily surrender connectivity and get a return of connectivity bank guarantees. Without choosing any of the new measures, developers can proceed under the current General Network Access (GNA) framework with the fourth choice. After Central Transmission Utility of India Ltd. (CTUIL) publishes the final list, entities covered by the order will have sixty days to exercise these options.
A key feature of the order is the introduction of a market-based mechanism for reallocating surrendered connectivity. Connectivity released under the surrender route will first be offered to projects already holding connectivity within the same substation cluster. Any remaining capacity will subsequently be auctioned by CTUIL through an open bidding process.
CERC has fixed a base price of Rs 3 lakh per MW for such auctions, with proceeds proposed to be utilised to reduce monthly transmission charges payable by designated interstate customers. The regulator has also directed CTUIL to formulate detailed auction guidelines within 60 days.
Industry participants have largely welcomed the move, arguing that it could significantly improve transmission utilisation while giving developers greater flexibility amid changing market dynamics. The CERC order also reflects increasing regulatory concern over speculative booking of transmission connectivity, an issue that has become more pronounced as India’s renewable capacity pipeline expands rapidly.
The Commission intends to guarantee that transmission infrastructure, one of the most limited resources in the energy transition, is assigned to projects with a higher likelihood of success by establishing a structured exit and reallocation process.
The release of roughly 16 GW of stranded connectivity could significantly improve project execution for India’s renewable sector, which is aiming for 500 GW of non-fossil fuel capacity by 2030, and relieve one of the most urgent bottlenecks in the sector.
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