Adequacy of Transmission Infrastructure Critical, Says ICRA

“The notified regulations are positive for developers in the renewable energy sector, as they provide clarity on the procedure and timelines for securing approval for connectivity from the central transmission utility.”

In a positive move for developers the Central Electricity Regulatory Commission (CREC) has put out new set of norms on inter-state transmission system (ISTS) for renewable energy projects, but the ICRA believes that adequacy of transmission infrastructure will remain critical for the implementation of these norms.

According to Senior Vice President & Group Head, ICRA Ratings, Sabyasachi Majumdar, “The notified regulations are positive for developers in the renewable energy sector, as they provide clarity on the procedure and timelines for securing approval for connectivity from the central transmission utility.”

“Moreover, the regulations accord priority to projects holding letter of award under the tariff-based competitive bidding for granting connectivity,” he said.

He further added, “Given that the existing inter-state transmission infrastructure in the states with high wind potential may not be sufficient to provide connectivity to the 5.1 Gw bid out by SECI so far.” Further, the augmentation of transmission infrastructure would take about 24-36 months, whereas the winning developers must commission the wind power projects within 18 months from the date of issuance of letter of award/signing of Power Purchase Agreement (PPAs).

“Thus, prolonged delays in securing connectivity would impact the project commissioning timelines and in turn viability of the projects for the winning developers, as delays beyond 6 months from scheduled commissioning date would result in reduction in PPA tariff,” Majumdar added.