CERC Approves 1.2 GW NHPC Wind-Solar Hybrid Tariffs Amid Regulatory Scrutiny

Background and Context

NHPC, acting as an intermediary procurer, initiated a competitive bidding process in December 2024 for 1.2 GW of interstate transmission system (ISTS)-connected wind-solar hybrid projects. The objective was to facilitate the procurement of renewable energy for distribution companies (DISCOMs) through a transparent, tariff-based bidding mechanism. Following an e-reverse auction held in March 2025, several prominent developers emerged as winners, including Adani Renewable Energy Holding Twelve, Sprng Vayu Vidyut, Illuminate Hybren, and Avaada Energy.

Key Details

The Central Electricity Regulatory Commission (CERC) has officially approved tariffs of ₹3.41/kWh and ₹3.42/kWh for the projects. While the bidding process was deemed transparent and compliant with Ministry of Power guidelines, the Commission exercised caution regarding the ‘greenshoe’ option—a mechanism allowing for the allocation of additional capacity beyond the original tender size. Specifically, CERC restricted Avaada Energy’s awarded capacity under the greenshoe option from 600 MW down to 210 MW.

The Commission also addressed the contentious issue of trading margins. NHPC had requested a trading margin of ₹0.07/kWh. However, CERC clarified that as an intermediary, NHPC’s role is primarily facilitative. The Commission ruled that trading margins must be mutually agreed upon by the parties involved and must strictly adhere to regulatory caps, emphasizing that the intermediary role does not grant unlimited scope for margin extraction.

What This Means for EPCs and Developers

For EPC contractors and developers, this order highlights the increasing regulatory oversight on project allocation mechanics. The restriction placed on the greenshoe option serves as a critical reminder that capacity awards are subject to regulatory scrutiny, even after successful e-reverse auctions. Developers must account for potential regulatory intervention when planning for capacity expansion via greenshoe options. Furthermore, the emphasis on transparent, market-aligned bidding suggests that future tenders will continue to face rigorous scrutiny regarding tariff discovery, necessitating robust financial modeling that aligns with current market benchmarks.

What Happens Next

CERC has directed all renewable energy implementing agencies, including NHPC, to seek formal clarification from the Ministry of Power regarding the implementation of greenshoe options. Key areas requiring clarity include the methodology for allocating additional capacity and the applicability of the 50% cap in scenarios where excess capacity arises due to non-acceptance by other bidders. Stakeholders should monitor these upcoming policy directives, as they will likely reshape the contractual frameworks for future large-scale hybrid energy tenders in India.

Original source: Mercom India
 |  Rewritten by MVA Pulse AI Editor