Central Electricity Regulatory Commission (CERC) has devised a mechanism for treatment of connectivity granted under the GNA Regulations where signing of the power purchase agreement (PPA) has been delayed.
In a suo moto order dated July 10, 2026, CERC has issued a mechanism for treatment of connectivity under the GNA Regulations based on the LoA where PPA has not been signed within a period of 12 months from the date of issuance of the LoA.
Genesis
GNA Regulations provide for an LoA issued by REIA as one of the routes to seek connectivity by REGS. The route was permitted, considering that the LOAs issued by REIA shall convert into PPAs and PSAs, thereby bringing certainty to RE generation development. However, it was learnt that for a large quantum of connectivity, granted on the basis of LoAs issued by different REIAs, PPAs have not been entered into by the REIAs with REGS due to the non-signing of the PSAs by buyers.
Objective
The CERC has maintained that “connectivity” is a scarce resource and the need of the hour is to utilize the stranded transmission capacity in a timely manner. CERC is of the view that REIAs instead of waiting indefinitely for signing of PSA and keep holding on to LoAs knowing fully well that such LoA is an eligible document for seeking connectivity (a scarce resource) should have taken appropriate action to find a way forward.
The detailed order is available on CERC’s official website and may be accessed using this external link.
Four-option model
In its order, CERC has broadly suggested a four-option framework to address the issue:
- Option-I: Exit from the LoA route, without surrendering the connectivity
- Option-II: Substitution of the LoA with a PPA signed under another LoA
- Option-III: Surrendering of such connectivity with return of Conn-BGs
- Option-IV: Continue to be governed in terms of the GNA Regulations
The CERC order notes that the mechanism has been made optional. This means that an entity covered under this order may choose any one of the options within the stipulated time or may not choose any of the options and continue to be governed under the GNA Regulations for full capacity or part capacity of the connectivity quantum, as the case may be.
CERC has directed that entities shall clearly provide, within the prescribed timelines as to whether they wish to choose one of the options among Options-I II & III or continue to be governed under the GNA Regulations.
Key to abbreviations:
LoA=Letter of Award; GNA=General Network Access; PPA=Power Purchase Agreement; PSA=Power Supply Agreement; REIA=Renewable Energy Implementing Agency; REGS=Renewable Energy Generation Scheme; BG=Bank Guarantee; Conn-BG=Connectivity Bank Guarantee
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