The Maharashtra Electricity Regulatory Commission (MERC) has provided relief to renewable energy developers by ruling against Maharashtra State Electricity Transmission Co. Ltd.’s (MSETCL) requirement for Grid Connectivity Bank Guarantees (GCBGs) linked to transmission system strengthening and augmentation works.
Under the revised framework, developers applying for intra-state transmission connectivity were required to submit bank guarantees equivalent to the estimated cost of transmission system strengthening and augmentation works. Developers argued that the requirement created a significant financial burden and was not part of the assumptions considered while bidding project tariffs and signing power purchase agreements.
MERC examined five petitions covering renewable energy projects with a combined capacity of around 1.7 GW. The petitions included TPREL’s solar and wind projects totaling 700 MW, Avaada Energy’s 500 MW solar projects, and JSW Neo Energy, along with Energevo Lights LLP’s 500 MW renewable energy portfolio.
The developers highlighted that the Maharashtra Transmission Open Access Regulations, 2016, do not provide authority to impose bank guarantees equivalent to the full cost of transmission augmentation. They further stated that such requirements could affect project viability, financial closure timelines, and investment decisions in the state’s renewable energy sector.
The bank guarantee demands issued by MSETCL varied depending on project requirements and transmission infrastructure needs, ranging from ₹113 crore to ₹580 crore. TPREL faced demands of ₹347.22 crore and ₹580.03 crore for separate project portfolios before revisions were made by the transmission utility.
MSETCL defended the revised procedure, stating that the GCBG mechanism was introduced to prevent speculative connectivity applications and ensure that only serious developers reserve transmission capacity. The utility said the framework was designed to address transmission congestion and capacity blocking by non-serious applicants.
The transmission company also stated that the revised process was developed after consultations with major renewable energy players and was aligned with connectivity-related provisions under the Central Electricity Regulatory Commission’s General Network Access (GNA) framework.
During the proceedings, MERC provided interim relief by directing MSETCL not to insist on enhanced bank guarantees and continue processing connectivity applications under the earlier framework.
The decision is considered significant for Maharashtra’s renewable energy sector, where large-scale solar and wind projects are planned. The ruling may influence future transmission connectivity policies and the approach toward sharing infrastructure-related costs between renewable energy developers and transmission utilities.
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