Introduction

In India, connectivity to the inter-state transmission system (“ISTS”) is governed by the Central Electricity Regulatory Commission (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2022 (“GNA Regulations”), under which renewable energy generating stations may seek connectivity through three routes, namely (i) letter of award (“LoA”)/ power purchase agreement (“PPA”) route, (ii) land route, or (iii) bank guarantee route. The LoA route was premised on the assumption that an LoA issued by a renewable energy implementing agency such as SECI, NTPC, NHPC or SJVN (“REIAs”) would culminate in a PPA and support project implementation.

However, in a large number of cases, although connectivity was granted on the basis of REIA-issued LoAs, the corresponding PPAs were not signed within the prescribed period, largely due to the non-materialisation of downstream power sale arrangements. This resulted in substantial ISTS connectivity remaining tied up under legacy LoAs without corresponding project progress.

Against this backdrop, the Central Electricity Regulatory Commission (“CERC”), by its order dated July 10, 2026 (“Order”), introduced a mechanism for treatment of ISTS connectivity granted on the basis of an LoA where the corresponding PPA has not been signed within 12 months from the date of issuance of such LoA. The Order is a one-time optional measure issued by CERC in exercise of its powers under Regulation 41 (Power to Relax) and Regulation 44 (Issue of Suo Motu Orders and Directions) of the GNA Regulations, to release approximately 15 GW of transmission connectivity presently blocked by legacy LoAs that have not culminated in PPAs and thereby enabling more efficient utilisation of scarce inter-state transmission infrastructure.

The Order provides the following four options to eligible entities:

(a) Option – I: Exit from the LoA route, without surrendering the connectivity.

(b) Option – II: Substitution of the LoA with a PPA signed under another LoA.

(c) Option – III: Surrendering of such Connectivity with return of connectivity bank guarantees (“Conn-BGs”).

(d) Option – IV: Continue to be governed in terms of the GNA Regulations.

Scope of the Order 

The Order applies only in cases where:

(i) the entity has been issued in-principle grant of Connectivity or final grant of Connectivity under the LoA route under the GNA Regulations or an entity with stage-II connectivity under the erstwhile Central Electricity Regulatory Commission (Grant of Connectivity, Long-term Access and Medium-term Open Access in inter-State Transmission and related matters) Regulations, 2009 based on the LoA and transitioned to the GNA Regulations or an entity who was granted connectivity under land or bank guarantee route under the GNA Regulations and has been converted as entity under the LoA route,

(ii) LoA was issued by REIAs between January 1, 2019 and May 31, 2025;

(iii) the PPA has not been signed (in full or in part) within 12 months from the date of issuance of the LoA; and

(iv) the project is included in the final list of eligible entities to be published by Central Transmission Utility of India Limited (“CTUIL”) under the Order. This process under the Order is time-bound. The relevant REIA is required to provide the LoA details to CTUIL within 7 days from the date of the Order. CTUIL must then publish a provisional list of eligible entities within 7 days of receipt of such data, allow 7 days for corrections, and publish the final list within 5 days thereafter.

Once the final list is published, the entity concerned has 60 days to elect one of the options available under the Order (as detailed below). If no option is exercised within such period, the connectivity continues to be governed by the GNA Regulations, and the entity loses the right to opt under the Order.

Key terms of the four options

The key terms of the four options available under the Order are set out below:

Particulars	Option I Exit	Option II Substitution	Option III Surrender	Option IV Continuity
Nature	The entity exits the LoA route and retains the existing connectivity.	The entity substitutes the original LoA with another PPA signed under another LoA. Such substitute PPA may be issued by a REIA, a distribution licensee or an authorized agency on behalf of a distribution licensee.[1]	The entity may surrender full or part of the connectivity (minimum converted quantum of 50 (fifty) MW for balance under Options I or II).	The entity may choose not to avail Options I, II or III and continue to be governed under the GNA Regulations.
Bank Guarantee Implications	Fresh performance bank guarantee (“PBG”) of INR 8,00,000/MW is required to be furnished. The existing Conn-BGs will remain valid and CTUIL will return it on declaration of commercial operation date (“COD”) and thereafter return PBG 1 year after COD.	Existing Conn-BGs continue for converted connectivity.	Existing Conn-BGs are returned (all in case of full connectivity surrender and proportionate in case of partial surrender) by CTUIL within 30 days of closure or clearing of dues, whichever is later.	Existing framework (under the GNA Regulations) continues.
Timeline	Fresh Scheduled Commercial Operation Date (“SCOD”) of up to 24 months from intimation of CTUIL’s acceptance or the firm start date of connectivity, whichever is later, will apply, with no change to the firm start date of connectivity already issued to the entity as on the date of the Order.	SCOD as per substitute PPA, and cannot exceed 30 months from the date of conversion.	–	Existing regulatory timelines continue (under GNA Regulations).
Milestones	Following fresh milestones apply: (i)     submission of land documents within 12 months from the revised CTUIL’s intimation or 9 (nine) months from communication of tentative substation coordinates. (ii)    achievement of financial closure by the later of 18 months from the revised CTUIL’s intimation or the timeline under Clause Regulation 11A(2) of the GNA Regulations, whichever is later.	Submission of financial closure documents under Regulation 11A(2) of the GNA Regulations.	Closure/surrender process to be completed with CTUIL.	Governed by existing GNA milestone framework.
Consequence	LoA becomes invalid for obtaining any other connectivity. If the entity fails to meet the milestones, CTUIL will revoke connectivity under the GNA Regulations and encash the PBG, with treatment of Conn-BGs under Regulation 24.3 and 24.4 of GNA Regulations.	Original LoA becomes invalid for obtaining any other connectivity. If the entity fails to meet the applicable milestones or achieve COD within the prescribed timeline, connectivity is liable to be revoked under the GNA Regulations and the Conn-BGs are to be dealt with under Regulations 24.3 and 24.4 of the GNA Regulations. Further, where connectivity had already been obtained on the basis of LoA2/PPA, such connectivity is required to be converted under Option I or Option III within the prescribed period, failing which it is deemed surrendered under Option III.	Freed-up connectivity is first proposed to be offered for reallocation within the same substation cluster and, if not reallocated, is to be auctioned by CTUIL in accordance with the mechanism set out in the Order.	–

It should, however, be noted that the benefit of the Order is not automatic, and a no objection certificate (“NoC”) from the concerned renewable energy implementing agency (“REIA”) is a prescribed document for availing Options I, II or III. In this regard, the Order clarifies that such NoC does not by itself terminate or cancel the underlying LoA. Rather, it enables the developer to seek release of the connectivity from the LoA route. The LoA may continue to remain valid unless separately cancelled in accordance with the applicable statutory, bidding guidelines or bid documents.

The Order further provides that where an entity converts under Option I or Option II, the relevant LoA ceases to be a valid document for obtaining any other connectivity or for converting connectivity from the land or land bank guarantee route to the LoA route. However, once the generating station achieves commercial operation date, there is no restriction on scheduling power under a subsequent PPA signed under such LoA.

One important feature of the Order is that, under the extant framework of the GNA Regulations, migration from the LoA route would ordinarily arise only after final grant of connectivity. Under this one-time mechanism, however, even entities holding only in-principle connectivity are eligible to avail the specified options, provided they are included in CTUIL’s final list and satisfy the conditions under the Order.

Conclusion

By creating a one-time pathway to retain, substitute or surrender connectivity that would otherwise remain blocked, the framework may improve the bankability and implementation prospects of stalled projects, while also enabling more efficient utilisation of scarce ISTS infrastructure. At the same time, the mechanism places renewed emphasis on project readiness, given the revised milestone framework, additional bank guarantee requirements and the risk of revocation for non-compliance. The reallocation and auction of surrendered connectivity may also help unlock access for more advanced projects and, as contemplated under the Order, where any proceeds realised will be applied towards reduction of monthly transmission charges of drawee designated ISTS customers under the relevant regulations. For ongoing and future projects, the framework is therefore likely to become an important consideration in structuring connectivity strategy, financing timelines and overall project execution planning.

[1] Please note that the substitute PPA may be signed by the connectivity grantee itself, its subsidiary, its parent company or another subsidiary of the same parent company, subject to the conditions under the Order.

Authors – Akshay Malhotra – Partner and Kopal Bhargava – Associate

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