The Ministry of Power (MoP) has amended the tariff-based competitive bidding process guidelines to procure round-the-clock (RTC) power from grid-connected renewable energy projects.

The guidelines were first issued under Section 63 of the Electricity Act, 2003, in July 2020. Subsequently, the guidelines were amended in November 2020, February 2021, and February 2022.

As per the latest amendments, renewable power generators must supply dispatchable power complemented with power from any other source round-the-clock, maintaining at least 90% availability annually. They also must maintain at least 90% availability monthly for at least eleven months in a year and 90% availability during peak hours.

Peak hours will be four out of 24 hours, as specified by the Regional Load Despatch Centers (RLDCs). The penalty for not meeting the stipulated availability will be equal to the tariff for the number of units not supplied.

Minimum availability

Renewable power generators can combine storage to achieve the required minimum annual availability of 90% and maintain at least 90% availability monthly for at least eleven months in a year. However, a minimum of 51% of energy must be offered annually from renewable energy sources. This 51% must also include an offer from the storage system, provided renewable sources were used to store energy in the storage system.

Bidding parameters

Bidding evaluation must be based on the weighted average levelized tariff per unit supply of RTC power. The procurer must invite bids wherein the bidder will quote the first-year weighted average levelized tariff in ₹/kWh.

The quoted tariff must comprise four parts – fixed renewable component, fixed non-renewable component, the variable component of non-renewable power escalable for fuel, and non-renewable power escalable for transportation.

The fixed component of renewable and non-renewable power tariffs will be quoted for each year of the power purchase agreement (PPA) term. The variable component of the non-renewable power will be quoted on the scheduled date of commissioning.

The levelized tariff must be arrived at using the Central Electricity Regulatory Commission (CERC) escalation indices for the type of fuel quoted by the bidder and the discount factor specified in the bidding document. The bidder must also quote the proportion of energy from renewable and non-renewable sources they intend to supply. The weighted average levelized tariff per unit supply will be arrived at for the term of the PPA and the proportion of energy from renewable and non-renewable sources.

PPA period

As the PPA period influences the tariff by determining the period over which the investment is returned to the investor, a longer PPA is favored for lower tariffs. The PPA period will be 25 years from the Scheduled Commissioning Date or the date of commissioning of total project capacity, whichever is later.

The PPA may also be set for a higher period, such as 35 years, but in any case, the duration must be mentioned upfront in the document. The generators are free to operate their projects after the expiry of the PPA period in case the arrangements with the land and infrastructure owning agencies, the relevant transmission utilities, and system operators provide.

In case the project availability is less than 90% annually or 90% availability monthly for at least eleven months due to reasons attributable to RTC power generators, the generators will be liable to pay the procurer a penalty for such a shortfall. The penalty for not meeting the stipulated availability will be equal to the fixed tariff for the number of units not supplied.

Payment Security

The end procurer must provide payment security to the intermediary procurer through a revolving letter of credit of an amount not less than one month’s average billing for the projects under consideration. If the end procurer is not eligible to be covered under the state government guarantee, the tender must contain provisions for payment of an additional risk premium of ₹0.10/kWh. This amount must be credited to the payment security fund maintained by the intermediary procurer and the letter of credit maintained by the end procurer.

Round-the-clock renewable projects help overcome the intermittency associated with solar and wind and provide generation flexibility to meet peak loads of distribution companies.

Mercom spoke to industry stakeholders to understand the vital role RTC projects play in shaping the renewable energy future for India.

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