CERC Approves ₹2.68-₹2.69/kWh Tariffs for NTPC’s 1.5 GW Solar Projects

Background and Context

NTPC, acting as an intermediary procurer, initiated a competitive bidding process to secure 1,500 MW of solar power to assist distribution companies (DISCOMs) in meeting their Renewable Purchase Obligations (RPOs). The procurement process was designed to ensure transparency and adherence to the Ministry of Power’s guidelines for large-scale renewable energy procurement. The tender attracted significant interest, with five major developers submitting bids for a cumulative capacity of 2,100 MW, exceeding the 1,500 MW requirement.

Key Details

The bidding process saw aggressive participation, with initial financial bids led by Avaada Energy at ₹2.69/kWh, followed by Apraava, Illuminate Hybren, JSW, and ReNew. Following an e-reverse auction and the application of a bucket-filling methodology, the final awarded tariffs were finalized between ₹2.68/kWh and ₹2.69/kWh. The Central Electricity Regulatory Commission (CERC) reviewed the process under Section 63 of the Electricity Act, confirming that the bidding was transparent and the tariffs were discovery-aligned with current market conditions.

The Commission has mandated that the adoption of these tariffs is contingent upon the formalization of Power Purchase Agreements (PPAs) and Power Sale Agreements (PSAs). Furthermore, the regulator set specific guidelines for trading margins: a margin of ₹0.07/kWh is permitted if mutually agreed upon, but it is strictly capped at ₹0.02/kWh in instances where robust payment security mechanisms, such as escrow arrangements or letters of credit, are absent.

What This Means for EPCs and Developers

For developers and EPC contractors, this approval signals a stable regulatory environment for projects priced under the ₹2.70/kWh threshold. The CERC’s validation of the bidding process confirms that the current market pricing is considered fair and competitive. Developers involved in these projects can now proceed with financial closure and procurement planning with greater confidence. The stringent requirements regarding payment security mechanisms emphasize the importance of robust financial structuring in future bids to ensure maximum trading margins for intermediaries.

What Happens Next

NTPC is now tasked with placing the signed PPAs and PSAs on record with the Commission. Stakeholders should monitor the timeline for project commissioning, as the CERC’s approval is the final regulatory hurdle for the commencement of project development. Additionally, the industry will look to see if these tariff levels become the new benchmark for upcoming ISTS-connected solar tenders, particularly as the sector moves toward larger, more complex hybrid and storage-integrated projects.