To increase solar power, transparency, Power Ministry issues new guidelines for bidding process
The Ministry has prepared guidelines for tariff based competitive bidding for procurement of electricity from grid-connected solar power projects under the National Solar Mission and has recommended a similar approach for other renewable power projects, excluding wind power at the present juncture.
These guidelines have been issued under the provisions of Section 63 of the Electricity Act, 2003 for long term procurement of electricity by the 'Procurers' the distribution licensees, having size of 5 MW and above, through competitive bidding. These documents have also been uploaded on the Ministry's website http://www.mnre.gov.in.
India is running the world's largest renewable power expansion programme and solar power is a critical element of this. The Government through transparent processes and an enabling environment has helped reduce solar tariffs to record low of Rs. 2.44 per unit. This has made solar power competitive and helped increase the installed capacity of grid connected solar more than 4 times to 13.1 GW in the last three years.
Here are the guidelines:
- To ensure lower tariffs, Minimum PPA tenure has been kept at 25 years. Unilateral termination or amendment of PPA is not allowed.
- Project preparedness to expedite and facilitate setting up of projects
- Event of Default and the consequences thereof clearly defined to ensure optimal risk sharing between Developer and Procurer
- Termination Compensation to increase bankability of projects by securing the investment by the Generator and the lenders against any arbitrary termination of PPA.
- Payment Security Mechanism
- Change in Law provision to provide clarity and certainty to generators, procurers, and investors/lenders
Following these guidelines will help enhance transparency and fairness in the procurement process, while protecting consumer interests through affordable power. It will also provide standardisation and uniformity in processes and a risk-sharing framework between various stakeholders involved in the solar PV power procurement. This will help in reducing off-taker risk and thereby encourage investments, enhance bankability of the Projects and improve profitability for the investors.