The Ministry of Power in India has issued guidelines for the tariff-based competitive bidding process for procuring firm and dispatchable power from grid-connected renewable energy projects with energy storage systems.

The objective is to provide reliable and predictable renewable power to distribution companies while addressing the challenges posed by the intermittent nature of renewable energy and low-capacity utilization of the transmission system.

These guidelines aim to promote competition, transparency, and standardized procurement to reduce power procurement costs, facilitate renewable capacity addition, and fulfill renewable purchase and storage power obligations. It will also ensure reasonable returns to investors and establish a framework for long-term inter-state and intra-state sale-purchase of power.

Here are some key points from the guidelines:

Tender and Project Preparedness

The generator must supply firm and dispatchable renewable power as per the demand profile specified in the request for selection (RfS), with penalties for non-compliance. Energy storage is required to ensure availability and performance criteria stipulated in the RfS. The generator must offer 100% renewable energy annually, with a provision to source up to 5% from green market sources or bilateral agreements. A single tariff (evaluated as the bidding parameter) must be quoted for the supply of firm and dispatchable renewable power. Bids will be invited in power capacity terms, with a minimum bid quantum of 50 MW. The maximum capacity that can be allocated to a single bidder is 50% of the bid capacity.

Bidding Process

The electronic-bidding process will follow a single-stage, two-part (Technical Bid & Financial Bid) process. Developers with existing or spare untied capacity can participate in the bid. Bids must be evaluated based on responsiveness and compliance with conditions specified in the RfS, and a minimum of two qualified bidders are required to maintain competitiveness.

The indicative timetable for the bid process

The RfS document must be issued on the zero date, and bidders will have 22 days to submit their bids. The technical bids must be evaluated, which would take approximately 64 days. The financial bids must be evaluated after the technical bids, and an e-reverse auction must be conducted. This stage of the process is expected to take approximately 99 days. After completing the evaluation and auction, the successful bidder must be issued a Letter of Award after 110 days. The PPA and power sale agreement must be signed within 140 days from the zero date.

Qualification

The procurer may specify technical criteria to assess the capabilities of project developers, ensuring sufficient competition. A financial criterion based on net worth is set, which should be at least 20% of the estimated cost of the renewable energy project. The procurer determines the amount of the EMD, which should be no less than 2% of the estimated capital cost of the project. The successful bidder must ensure a shareholding of above 51% in the special purpose vehicle or project company executing the PPA until one year from the scheduled commercial operation date (SCOD). The promoters of the bidding company or consortium must not relinquish control of the entity until one year from the SCOD, except with the prior approval of the procurer.

Power Purchase Agreement

The PPA period must typically be 20 years from the scheduled commencement-of-supply date, extendable up to 25 years. Power procurement should be based on specified conditions, including the maximum and minimum contracted capacity, the maximum percentage of the shortfall, the maximum percentage of excess generation, and the contracted capacity utilization factor. The PPA must include provisions for Force Majeure events, generation compensation, deviation settlement mechanism, payment security, default, change in law, and termination.

Commencement of Power Supply:

The power supply should begin within 24 months (for projects up to 1,000 MW) or 30 months (for projects larger than 1,000 MW) from executing the PPA. For delay in the commencement of power supply up to six months from the scheduled commencement-of-supply date, encashment of performance bank guarantee on a per-day basis and proportionate to the delayed capacity will be allowed. The generator will be debarred from participating in bids issued by any procurer or intermediary procurer for one year.

For delay in commencement of power supply beyond six months, the contracted capacity will stand reduced to the project capacity that has commenced supply of power within the scheduled commencement-of-supply date plus six months. The PPA for the balance contracted capacity that has not started the power supply will be terminated. The generator will be debarred from participating in bids issued by any procurer or any intermediary procurer for not less than two years and not more than three years for the second and any subsequent defaults.

The procurer must accept the commencement of power supply from the project in parts, with the condition that the minimum capacity for acceptance of the first and subsequent parts should be 50 MW. The supply contracted scheduled date should not be altered due to the part-commencement of the power supply. If a project consists of multiple components (wind, solar, or other renewable energy power generating systems), and one or more components are ready to inject power into the grid while the remaining components are unable to commence power supply, the generator has the option to supply power from the ready components outside the scope of the PPA. If the Procurer or Intermediary Procurer decides to buy the power from the discrete components outside the PPA, the purchase price will be up to 50% of the PPA tariff for the relevant contract year.

Deviation from the Process Definition

If it becomes imperative for the procurer to deviate from these Guidelines, they will be subject to approval by the Appropriate Commission before initiating the bidding process. The Commission should approve or suggest modifying the bid documents within a reasonable time not exceeding sixty days of filing such a petition.

Clarification and modification to guidelines

In case of difficulty in implementing any provision of these Guidelines, interpretation, or modification to the guidelines, the Ministry of Power is empowered to do the same, with the approval of the Ministry of New & Renewable Energy (MNRE). The decision in this regard will be binding on all the parties concerned.

In April, MNRE issued an agency-wise bidding calendar for 50 GW renewable energy projects for the current financial year (FY 2023-24). The calendar entails a schedule of 30 GW of renewable capacity for the first two quarters and 20 GW in the last two quarters.

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