MoP announces guidelines for grid connected solar PV power projects

The Ministry of Power (MoP) has issued new guidelines for a tariff-based competitive bidding process to procure power from grid connected solar PV projects to achieve fair procurement of electricity, transparency, and competitive prices. By creating a framework for long-term solar power transactions between states, the goal is to stabilise and de-risk the clean energy sector. The new guidelines will be application to all forthcoming with or without energy storage solar projects which earlier lacked provisions with regard to energy storage.

The period for power purchase agreement has been revised from 25 years to 20 years from the date of commissioning with an exception of 25 years period in case of circumstances that will be beyond the control of generator. Furthermore, the bidders will be provided with the capacity offered by them only if their tariff bids lie between two and five per cent of the lowest rate quoted by a bidder.  The guidelines also specify the restriction of allocating a maximum capacity of 50 per cent to a single bidder as mentioned in request for selection (RfS), which did not exist earlier. The new guidelines provide flexibility to bidders to offer a part of aggregate power procured. In addition, the bidders can bid at least 50 MW of capacity connected to inter-state transmission system with a minimum bid of 10 MW for projects connected to state transmission utility as compared to earlier minimum bid capacity of 50 MW for both kind of projects. Further, the timeline for completing bidding process is set at 110 days with an additional time provided to bidders in case of any changes in the RfS document.

In order to address power procurement, the guidelines impose penalties on generators for energy that falls below the minimum capacity utilisation factor (CUF). A penalty of one and a half times 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 of the projects of 1,000 MW and 2,000 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. Any guidelines related to generator’s prohibition in case of delay was not there earlier.