Petition for the Adoption of tariff for 2100 MW Firm & Despatchable Power from ISTS connected RE Power Projects by Govt. of India – EQ

Summary:

—

### Key Business, Legal & Regulatory Points

**1. Parties & Subject Matter**
– **Petitioner:** NHPC Limited (designated as an Intermediary Procurer/REIA by MNRE).
– **Respondents:** Five successful Renewable Energy Power Generators (REPGs), including Avaada Energy, Essar Renewables, and Serentica Renewables.
– **Subject:** Petition under Section 63 of the Electricity Act, 2003, seeking adoption of tariff for 2100 MW (1200 MW base + 900 MW “Greenshoe Option”) of FDRE power with Energy Storage Systems (ESS).

**2. Bidding Process Overview**
– **Guidelines:** The bidding was conducted under the MoP’s “Guidelines for Tariff Based Competitive Bidding Process for Procurement of Firm and Dispatchable Power… (FDRE)” dated 9.6.2023.
– **Process:** Single-stage, two-envelope (Technical & Financial) e-bidding followed by an e-Reverse Auction (e-RA) on 12.9.2024.
– **Outcome:**
– **Base Capacity (1200 MW):** Allocated to five bidders at tariffs of **₹4.37/kWh** and **₹4.38/kWh**.
– **Greenshoe Option (900 MW):** Offered to successful bidders at the lowest (L1) tariff of ₹4.37/kWh. After multiple rounds of willingness and eligibility checks, this capacity was allocated to three bidders, with Avaada Energy receiving 730 MW (on top of its 470 MW) and Hexa Climate receiving 120 MW (on top of its 80 MW).

**3. Key Regulatory Concerns Raised by CERC**
– **Delay in Filing:** The petition was filed late. NHPC blamed a request to MNRE for guideline review and delays in tying up power. The CERC, while condoning the delay, instructed NHPC to strictly adhere to the 15-day timeline for tariff adoption filings in the future.
– **Reasonability of Tariff:** NHPC provided a comparison of tariffs from other REIA tenders (ranging from ₹4.25/kWh to ₹4.99/kWh). The CERC found the discovered tariffs (₹4.37-4.38/kWh) to be reasonable and within this range, especially given similar power profile configurations in other adopted cases.
– **The “Greenshoe Option” (Primary Concern):** This was the central issue. The CERC noted:
– The **MoP Guidelines do not define or provide for a “Greenshoe Option.”** NHPC admitted this, stating it was a “standard bidding practice.”
– Allocating additional capacity (e.g., 730 MW to Avaada and 120 MW to Hexa) far in excess of their originally won capacities (470 MW and 80 MW, respectively) raised concerns about **transparency, consistency, and equal treatment of bidders.**

**5. Business Implications**
– **For NHPC & Other REIAs:** This order serves as a strong warning against using mechanisms not explicitly covered in government guidelines. They must now seek formal clarification from the MoP on the Greenshoe Option to ensure future bids are not challenged or partially overturned.
– **For Developers (Avaada & Hexa):** Their awarded capacity was significantly reduced, impacting their potential revenue and project scale. This highlights the risk of relying on “standard practice” allocation mechanisms that lack a clear regulatory or governmental basis.
– **For the Power Sector:** The ruling reinforces that while tariff discovery is respected, the **process must strictly adhere to notified guidelines** to ensure a level playing field. It pushes for greater regulatory certainty in innovative procurement structures like the Greenshoe Option.

—-

For more information please see below link: