The government has invoked special powers to direct electricity regulator Central Electricity Regulatory Commission (CERC) to change regulations enabling renewable companies to sell projects won in auctions along with transmission access after one year of commissioning.
This would encourage consolidation in the sector and creation of economies of scale, as also make it easier to raise funds.
The Union Power Ministry has invoked special dispensation available under section 107 of the Electricity Act to allow transfer of attached transmission connectivity to the buying firm, sources said.
The ministry of renewable energy has in the bidding documents of projects provided for 49% equity divestment in the project’s special purpose vehicle after signing of power purchase agreement and 100% after one year of commissioning.
However, the CERC regulations on transfer on transmission connectivity and long-term access, provide that bidder can divest 49% equity only to its 100% subsidiary that too after one year of commissioning.
The sources said the Power Ministry on Friday issued directions to CERC for alignment of the transmission regulations.
Industry welcomed the move which will enable renewable companies to mop-up finance.
The renewable energy sector witnessed an unprecedented jump in acquisition in 2020. PwC had estimated that deals totalling about $4 billion were made in the sector in 2020 against about $2.7 billion in 2019.
Last month, French oil and gas major Total announced acquisition of 20% stake in Adani Green Energy from Adani Group and 50% ownership in company’s 2 GW operating solar power plants for $2.5 billion.
The deals struck in 2020 include $219 million acquisition of ReNew wind assets by Ayana, $178 million Essel Infraprojects solar assets purchase by Adani Green Energy and $227 million RattabIndia solar assets buyout by Global Infrastructure Partners.
A senior government official said the alignment of MNRE bid rules and CERC regulations concerning transfer of transmission access will enable the passage of the deals and fasten fund raising by renewable projects.
However, experts expressed concerns on frequent use of powers by the government under section 107 of Electricity Act.
The government had last month invoked Section 107 to direct CERC to make changes in regulations freeing power plants delayed due to justifiable reasons from paying penalties to associated transmission projects.
The penalties would now be borne equally by all beneficiary discoms of a generation project.
CERC had in April last year reduced the late payment surcharge payable by distribution companies to generation and transmission companies to 1% per month from the previous 1.5% per month during the lockdown period, upon the Centre’s directions under section 107 of Electricity Act.
