The guidelines for tariff-based competitive bidding to procure firm and dispatchable power from grid-connected renewable energy projects with energy storage systems were first notified on June 9, 2023. These guidelines were later amended on November 17, 2023, and again on February 2, 2024. The Ministry of Power has now introduced further amendments to these guidelines, affecting several key clauses.
One of the changes is in Clause 3.1.1(b), which now states that any deviations in the draft bidding documents, such as the Request for Selection (RfS), Power Purchase Agreement (PPA), and Power Sale Agreement (PSA), must be approved by the appropriate commission. However, if deviations were already approved by the government before these amendments, fresh approval will not be necessary. It is also clarified that providing detailed provisions in the project agreements in line with the guidelines will not be considered deviations.
A new clause, 3.3, has been added, allowing procurers to specify the sub-stations in the inter-state or intra-state transmission system where developers must connect their renewable power projects. This change aims to bring more clarity to location-specific bids.
Section 7.6(b) has been modified to address the consequences of generators failing to maintain the committed Capacity Utilization Factor (CUF). If a generator does not meet the minimum CUF for two consecutive years, excluding the first contract year, it will be considered in default. In such cases, the yearly minimum CUF obligation will be reduced to the average CUF of the two default years, and the generator must pay lump sum damages for up to 24 months or the remaining PPA period. If the generator fails to pay, the PPA may be terminated, and additional damages will be applicable.
Clause 7.7 has been revised to align the provisions of change in law with the Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021. The term “Change in Law” will now apply to events occurring within seven days before the last date of bid submission.
Clause 9.2.1 has been modified to ensure a balance between competition and project implementation feasibility. Procurers may specify technical criteria after assessing how many developers can meet them. Additionally, developers will be required to install GPS-enabled automatic weather stations and comply with cybersecurity regulations set by the central government.
A new Clause 10.3 states that the signing of the PPA and PSA should generally be completed within 30 days from the Letter of Award (LoA) issuance. This period can be extended up to 12 months, but beyond that, the LoA will be canceled. It is also clarified that any extension granted by the procurer will not be considered a deviation from the guidelines.
Clause 11.4 has been revised, making it mandatory for distribution licensees or intermediary procurers to approach the appropriate commission within 30 days of discovering the tariffs through competitive bidding.
New provisions have been introduced for earnest money deposits and performance bank guarantees. Insurance surety bonds can now be used as an alternative to bank guarantees, and other instruments approved under the General Financial Rules may also be accepted.
Finally, Clause 12.3 has been updated to clarify that performance bank guarantees can be encashed to recover damages or dues from the generator in case of default under the PPA. The recovered amount will be credited to the Payment Security Fund. Once the power supply begins, the guarantee will be returned within 45 days. In cases of partial power supply commencement, the corresponding guarantee will also be released within 45 days.
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