MoP announces ‘Guidelines for Tariff Based Competitive Bidding Process for Procurement Power from Grid Connected Wind Power Projects’

The Ministry of Power (MoP) has issued new guidelines for the tariff-based competitive bidding process to procure power from grid connected wind power projects to meet renewable purchase obligation of distribution licensee and to raise renewable capacity. By creating a framework for long-term wind power transactions between states, the goal is to stabilise and to reduce risk in clean energy sector. The new guidelines will be application to both inter-state transmission system (ISTS) projects of 10 MW and above, and 50 MW and above.

With regard to bid preparation and process, the documents must be prepared in line with the guidelines and the purchaser will be required to seek approval from the ministry in case of any deviation. The notice of request for proposal (RfP) has to be published on purchaser’s website along with minimum two national newspapers. Technical bids will be opened followed by financial bids only if the bidder qualify in the technical round. It includes minimum earnest money deposit and financial criteria of 2 percent and 20 percent, respectively, of the estimated capital cost. In addition, the developer is required to provide a performance bank guarantee equal to 5 percent of the estimated capital cost.

Furthermore, the purchaser is required to form an evaluation committee of minimum three members which should necessarily include a financial expert. There should be a gap of at least 22 days from the issuance of RfP document to the deadline for bid submission. The letter of award must be issued within 110 days and power purchase agreement (PPA) and power sale agreement must be signed within 140 days from zero date. Before the commencement of power supply, the wind power generator will be in charge for obtaining permits, clearances, land, licenses and grid connectivity. The procurer is required to set minimum bidding capacity. Along with this, procurer may also set maximum capacity to be offered to a single bidder.

The period for power purchase agreement has to be 20 years from the date of commercial operation with an exception of 25 years in some cases. The procurer is required to allot the capacity based on the tariff quoted but only to those bidders whose tariff lies in a predefined category from the L1 bidder. A yearly calculated range for capacity utilisation factor (CUF) must be mentioned in the bidding documents. In order to address power procurement, the guidelines impose penalties on generators for energy that falls below the minimum CUF. A penalty of 50 per cent of the PPA tariff will be imposed in such a case. Further, the guidelines provide the procurer the first right to refuse the purchase of extra generation if the energy available goes beyond the maximum CUF.

The commercial operation date for the projects of maximum 1,000 MW and above 1,000 MW capacities are scheduled to be 24 months and 30 months, respectively, from the date of signing of the PPA. The guidelines call for a reduction in contracted capacity and termination of the PPA for the remaining contracted capacity for delays longer than six months from the scheduled commissioning date. The generator may also be prohibited from bidding for a predetermined amount of time.