The Ministry of New and Renewable Energy (MNRE) has released draft guidelines for tariff-based competitive bidding process for solar projects.

Here are some key points from the draft proposal

  • For a project site specified by the procurer, the procurer will have to ensure 100 percent land possession within three months of signing a power purchase agreement (PPA).
  • For a project site specified by the procurer within a solar park, to ensure timely commencement of the supply of electricity, the procurer will ensure that various project preparation has been complete by the solar park developer, such as land availability and temporary transmission.
  • For a project site selected by solar power generator, the land should have been identified at the time of bid submission and should be 100 percent available within seven months of PPA signing.
  • The draft proposal states that bids will be designed in packages with a the minimum package size of 50 MW. Though, smaller bid packages can be kept in case of special category states and union territories.
  • When the tariff is used as the bidding parameter, power is either procured at a fixed tariff in Rs./kWh for 25 years or more or at an escalating tariff in Rs./kWh with pre-defined annual escalations fixed in Rs./kWh and number of years for which such fixed escalation will be provided.
  • When VGF is used as the bidding parameter, a predetermined tariff is offered to the solar power generator along with financial assistance. For VGF-based bidding, the procurer must specify the pre-determined tariff payable to the selected solar power generator for the duration of the PPA and the maximum amount of VGF. The bidders who do not want to use VGF, can offer a discounted tariff, lower than the pre-determined tariff offered by the procurer.
  • The MNRE has specified the PPA period should not be less than 25 years from the date of the scheduled commissioning of the project and the solar power generators will be free to repower their projects from time to time during the PPA duration.
  • A project will only be considered for partial commissioning when a minimum of 50 percent of the project is complete. In the case of early commissioning, the procurer will have to purchase the power generated at 75 percent of the PPA tariff until the specified commissioning date arrives.
  • All solar projects should be commissioned within a 13-month period from the date of PPA signing, except for projects with a capacity of 250 MW and above being developed outside of a solar park; these can be commissioned within a 15-month period from the date the PPA was signed, according to the new guidelines.

The draft addresses some of the problem areas that has made large-scale project development challenging. With this draft, MNRE is hoping to replicate the ‘success’ of REWA auction which saw record low tariff of Rs.3.30 (~$0.049)/kWh.

Image credit: By Narendra Modi, CC BY-SA 2.0, via Wikimedia Commons