The Ministry of New and Renewable Energy (MNRE) has issued tariff-based competitive bidding guidelines for power procurement from grid-connected solar-wind hybrid projects. The guidelines stated that the Solar Energy Corporation of India (SECI) would be the nodal agency for implementing these guidelines. Projects will be canceled if SECI cannot enter into a power sale agreement (PSA) to sell the power from these projects awarded within six months from the date the letter of award is issued.
The objective is to provide a framework for procuring electricity from the interstate transmission system (ISTS) connected wind-solar hybrid power projects through the competitive bidding route. They are also meant to protect consumer interest, enable transparency and fairness in procurement, and to provide a risk-sharing framework among all stakeholders.
The guidelines declared that all hybrid power projects (wind-solar hybrid) would be selected through a transparent e-bidding process followed by an e-reverse auction. The power purchase agreements (PPAs) for these projects should not be less than 25 years from the scheduled commissioning date (SCOD).
Power procured from these projects can be used by purchasing entities to meet their solar and non-solar RPOs proportionate to the rated capacity of wind and solar power in the hybrid project.
Power procurers can opt for a fixed tariff in terms of rupees per kilowatt (₹/kWh) for 25 years or more. Alternatively, they can choose an escalating tariff in ₹/kWh with a pre-defined number of annual escalations. These escalations will also be fixed in terms of ₹/kWh and the number of years from which the escalations will start.
The rated power capacity of one of the renewable energy sources should be at least 33% of the total contracted capacity for the project to fall within the scope of the guidelines.
They allowed for the individual solar and wind components of these hybrid projects to be implemented at the same or different locations. These projects can be attached to battery energy storage systems (BESS). The minimum allowed size for these hybrid projects is 50 MW at one site. Bidders are not allowed to place bids for less than 50 MW.
They also said that state governments would appoint state nodal agencies. The state nodal agencies will support developers by facilitating required approvals and sanctions to ensure that the project is commissioned within the specified timeline. They will also coordinate with state and central agencies to speed up project implementation.
According to the new guidelines, bidders are expected to submit documents or lease agreements showing they have possession of and the right to use 100% of the land required projects in their name for the entire PPA duration on or before the SCOD. If private land has been leased, the lease should allow for the transfer of land lease rights to the lenders or procurer if a default is on the hybrid power generator’s side.
Additionally, selected bidders are also expected to provide no-objection certificates (NoC), environmental clearance, forest clearance, NoC from the Ministry of Defense, a letter from the Central Transmission Utility (CTU) confirming the technical feasibility of connecting the project to its substation, and any other clearances as required.
Capacity Utilization Factor:
The MNRE said the declared annual capacity utilization factor (CUF) should not be less than 30%. Generators must maintain a generation level to achieve a minimum CUF of 90% and a maximum CUF of not more than 120% of the declared value. The annual CUF will be calculated every year from April 1 to March 31.
If excess power over the maximum CUF is produced, generators can sell it to any other entity upon the procurer’s approval. If the procurer purchases the excess generation, they are expected to pay 75% of the PPA tariff.
The guidelines declared that duly commissioned hybrid power projects should not be ordered to back down generation by a distribution company (DISCOM) or a load dispatch center. In the event of a backdown or power not being dispatched due to non-compliance, the power generator is eligible for a minimum generation compensation from the procurer. This is to be paid along with the energy bill for successive months.
If power is backed down or curtailed for grid safety or security reasons, generators will not be eligible for any compensation.
There must be at least a 22-day gap between the issue of the request for selection (RfS) documents and the last date of bid submission. Bids must be evaluated and letters of intent (LoI) within 110 days from the issues of the RfS. PPAs and PSAs must be signed within 140 days.
Hybrid power generators are expected to attain financial closure as per the PPA terms within 12 months from the date of execution of power purchase agreements. Projects must be commissioned within 18 months from the date of execution of the PPA.
If commissioning is delayed by less than six months from the SCOD, the deposited performance bank guarantee may be encashed on a daily basis based on the proportion of the project capacity that has not been commissioned. If the delay is over six months from the SCOD, it will be considered a “Generator Event of Default, and the contracted capacity will be lowered to the capacity that has been commissioned up to that point. The PPA for the capacity that has not been completed and commissioned will be terminated.
If commissioning is delayed resultant of setbacks in acquiring a long-term access (LTA) agreement or in the readiness of the ISTS substation, delivery point, power evacuation, or transmission system infrastructure, they will be treated as delays beyond the control of the generator. Subsequently, the SCOD will be extended by 60 days after the setbacks have been addressed.
Many energy experts believe that wind-solar hybrid projects are the solution to the problem of intermittency of renewable power. According to Mercom’s Renewable Energy Regulatory Updates, in May 2018, MNRE announced the wind-solar hybrid policy, that aimed to provide a framework for the expansion of grid-connected wind-solar photovoltaic hybrid systems in the country.
Back in October 2019, the Ministry had issued its draft guidelines for the tariff-based competitive bidding process to procure power from grid-connected wind-solar hybrid projects.
Nithin is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.