Hybrid Hope

MNRE amends the guidelines for wind-solar hybrid power procurement

Renewable energy projects often witness variability in power generation and grid stability. It has, been established that hybrid renewable energy systems can reduce this variability, and allow optimal and efficient utilisation of the transmission infrastructure and land. The complementary generation patterns of wind and solar, along with storage facilities, can help enhance the overall output from renewable energy projects. To this end, guidelines for the procurement of wind-solar hybrid power through the tariff-based competitive bidding (TBCB) process were issued in October 2020. The guidelines provide a framework for the procurement of power from hybrid projects through a transparent bidding process. In a recent notification issued by the Ministry of New and Renewable Energy (MNRE), the guidelines for TBCB for power procurement from grid-connected wind-solar hybrid projects have been amended.

Highlights of the amendments

Change in agency roles: As per the amended guidelines, SECI will no longer be a nodal agency for implementing the guidelines and conducting the e-bidding process. Instead, it will remain an intermediary procurer between discoms and hybrid power generators. It will buy power from a hybrid power generator and sell it to one or more distribution licensees. The amendment also allows discoms to directly procure power from hybrid power generators. They can be responsible for inviting bids, project preparedness, bid documentation and site-related preparatory activities such as clearances.

Early commissioning: A hybrid power generator will be permitted to fully or partly commission a project prior to the scheduled commissioning date, subject to the availability of transmission connectivity and long-, medium- or short-term access. The original guidelines only allowed early commissioning with transmission connectivity and long-term access.

Payment security: The procurer is required to provide adequate payment security measures, which have been stated for two different power procurement scenarios. The first scenario is where the discom directly procures power from the hybrid generator. The payment security clause includes a revolving letter of credit of an amount not less than one month’s average billing from the project under construction. A payment security fund, which should be sufficient to support payment for at least three months’ billing of all projects tied up with the fund, has also been included. Discoms may also choose to provide a state government guarantee, in a legally enforceable form, to the hybrid power generator, ensuring that there is adequate security, in terms of both payment of energy charges and termination compensation if any. The second procurement scenario is where the intermediary procurer procures hybrid power from the hybrid power generator and sells it to the discoms. The payment security is to be given to the power generator by the intermediary procurer in the same manner as the first scenario. For the purpose of the payment security fund, the intermediary may collect Rs 500,000 per MW from the hybrid power generator. The discom also needs to provide payment security to the intermediary procurer using a revolving letter of credit and a state government guarantee, in a legally enforceable form.

Delay in commissioning due to delay in LTA operationalisation: The original guidelines required generators to submit long-term access confirmation before commissioning a project. As per the amended guidelines, long-, medium- or short-term access confirmation can be submitted by the generator before commissioning a project. However, for power sale to the procurer from the scheduled commissioning date, the hybrid power generator must have long-term access. Once connectivity is granted, if the generator has complied with all application formalities as per the outlined procedures and any delay in readiness of substations at the delivery point and the transmission infrastructure is solely the responsibility of the central or state transmission utilities, such projects will be treated as delayed beyond the control of the generator. These projects will then be eligible for suitable time extensions with respect to their scheduled commissioning dates.

Outlook

The new amendments allow discoms to directly procure power from hybrid power generators. This provision will help discoms to procure power at a lower tariff by omitting the trading margin to be paid to SECI. The amendments can enhance the risk-sharing framework between various stakeholders involved in wind-solar hybrid power procurement. The amended guidelines thus aim to address some of the existing challenges in implementing large hybrid projects, and encourage investments by enhancing the bankability of projects.

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