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

The Ministry of Power (MoP) has issued new guidelines for the tariff-based competitive bidding process to procure power from grid-connected wind-solar hybrid power projects to achieve fair procurement of electricity, transparency, and competitive prices.  By creating a framework for long-term hybrid power transactions, the goal is to stabilise and de-risk the clean energy sector. The new guidelines will be applicable to both intra-state and inter-state transmission projects of capacities, 10 MW and above, and 50 MW and above, respectively. The revisions will be applicable to all forthcoming with or without energy storage wind-solar hybrid projects.

With regard to bidding period and structure, 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 request for selection (RfS) document. 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 RfS, which did not exist earlier. The period for power purchase agreement (PPA) 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.

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. In order to address payment security mechanism, the revised guidelines are in line with electricity rules. In order to be eligible for fund coverage established by the procurer, a commitment of Rs 0.02 per kWh is needed on behalf of the generator. Furthermore, 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.

Additionally, 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 year for the first default, minimum two years and maximum three years for defaults thereafter.