After wind and solar, the Ministry of Power has now introduced new guidelines for tariff-based competitive bidding for grid-connected wind-solar hybrid power projects, aiming for transparency, fair procurement, and competitive prices.

The revised guidelines encompass revised bid capacity limits, altered timelines, regulations on power procurement, and penalties for delays. These changes aim to stabilize and mitigate risks within the renewable energy sector by establishing a structured framework for long-term hybrid power transactions.

Here are the key changes in the guidelines:

Applicability

These guidelines will apply to all future wind-solar hybrid power projects of 10 MW and above capacity for intra-state transmission and 50 MW and above for inter-state transmission, with or without energy storage. However, at least 33% of the total capacity must be from either wind or solar resources.

The earlier guidelines had set the minimum bid package at 50 MW for all projects.

Bidding Timeline

The new indicative timetable for the bidding process is as follows:

Under normal circumstances, the bidding process should be completed in around 110 days. If there are any changes in the RfS (request for selection) document, additional time must be given to bidders.

The earlier guidelines did not specify separate timeframes for the evaluation of technical bids and the evaluation of financial bids with the e-reverse auction.

Bid Structure

Bidders will be allocated the power capacity they offered only if their tariff offers fall within 2-5% of the lowest bid. The earlier guidelines did not specify this range for other bidders’ offers in relation to the lowest (L1) tariff.

The bidding parameter is now the tariff quoted in ₹/kWh for the power purchase agreement (PPA) period. Under the previous guidelines, procurers could opt for either a fixed ₹/kWh tariff for 25 years or more or an escalating tariff in ₹/kWh with pre-defined annual escalations and years.

Under the new guidelines, a maximum of 50% of the total capacity specified in the RfS can be allocated to a single bidder. Previously, there were no restrictions on the capacity allotted to a single bidder.

Power Purchase Agreement Period

The PPA is set at 20 years from the scheduled commissioning date. However, it may be extended up to 25 years if the procurer grants an extension due to circumstances beyond the generator’s control.

Under the previous dispensation, the PPA period was 25 years from the scheduled commissioning date.

Power procurement

If the power supply falls below the minimum capacity utilization factor (CUF), the generator will be required to pay a penalty of one and a half times the PPA tariff for the energy shortfall.

As per the earlier guidelines, the penalty amount was determined under the terms of the PPA and was designed to offset potential costs associated with low generation and supply of power. The penalty was calculated at 50% of the cost of the energy shortfall per the PPA tariff.

The earlier guidelines required a minimum declared annual CUF to be above 30%. The annual CUF range was set between 90% and 120% of the declared value during the PPA period. These calculations have now been removed.

If the energy available exceeds the maximum CUF specified, the generator can sell it to other entities, but the procurer will have the first right of refusal. If the procurer purchases the excess generation, they can do so at the PPA tariff.

Under the earlier guidelines, the procurer purchased the excess power at 75% of the PPA tariff.

Payment Security Mechanism

Under the updated guidelines, the payment security mechanism (PSM) aligns with the Electricity (Late Payment Surcharge and Related Matters) Rules. The intermediary procurer can establish a payment security fund. To qualify for fund coverage, developers must commit to a PSM charge of ₹0.02 (~$0.00024)/ kWh.

The earlier guidelines mandated that the intermediary procurer must pay security to the generator through a revolving letter of credit valued at no less than one month’s average billing from the relevant project. The earlier payment security fund mandated the intermediary to collect ₹500,000 (~$6,028)/ MW from generators.

Power Supply Commencement

The commencement of the supply schedule for power projects is as follows:

• For projects up to 1,000 MW capacity, the power supply must begin within 24 months of signing the PPA.
• For projects above 1,000 MW capacity, the power supply must begin within 30 months of signing the PPA.

The earlier guidelines mandated that the projects should be commissioned within 18 months, irrespective of their capacity.

Penalties for delays

In case of a delay in the commencement of power supply beyond six months from the scheduled commissioning date, the contracted capacity will be reduced to the project capacity that has already started supplying power within the scheduled commissioning date plus six months. The PPA for the remaining contracted capacity that has not started supplying power will be terminated.

The generator will also be banned from participating in bids issued by any procurer or intermediary procurer for one year for the first default, not less than two years, and not more than three years for subsequent defaults.

The earlier guidelines did not include provisions for debarment of the generator in case of a delay in the commencement of the power supply.

The Ministry recently issued new guidelines for the tariff-based competitive bidding process for procurement power from grid-connected wind and solar projects.

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