Government Issues New Bidding Guidelines for Wind Power Projects

The guidelines will establish a framework for long-term sale and purchase of wind power


The Ministry of Power has introduced new guidelines for the tariff-based competitive bidding process for procurement power from grid-connected wind power projects to boost renewable capacity and meet the distribution licensee’s renewable purchase obligation (RPO).

The guidelines aim to create a transparent and fair procurement framework through open competitive bidding, ensuring competitive prices and risk-sharing among stakeholders to enhance project bankability and investor returns.

The guidelines also seek to establish a framework for long-term sale-purchase of wind power between states, further stabilizing and derisking the renewable energy sector.


The guidelines will apply to projects with a bid capacity of 10 MW and above connected to the intra-state transmission system and projects with 50 MW and above bid capacity connected to the inter-state transmission system.

Bid Preparation

The Ministry has outlined specific conditions for the procurer to adhere to for inviting bids and project readiness. Firstly, they need to prepare bid documents in line with the provided guidelines, and in case of any necessary deviations, the procurer must seek approval from the government.

The request for selection (RfS) may include additional milestones related to land acquisition, connectivity, and reporting requirements for the project, and penalties for non-compliance must be specified.

The wind power generator is responsible for obtaining all necessary clearances, permits, licenses, land, and grid connectivity before the scheduled date of power supply commencement.

Bid Structure

The bidding structure for wind power procurement involves the procurer inviting bids based on power capacity (MW) terms with a minimum bid capacity. The procurer may also set a maximum capacity to be allotted to a single bidder.

The bidding parameter is the tariff quoted by the bidder, which should not exceed a benchmark tariff specified by the procurer. Bids will be allocated based on bucket filling, starting with the bidder (L1 bidder) offering the lowest tariff (L1 rates). Subsequent bidders (L2, L3, etc.) may be allocated capacity if their tariffs fall within a predefined range from the L1 tariff (usually 2% to 5%), as stipulated in the RfS.

The procurer may choose an e-reverse auction for final selection and disclose incentives available to wind power generators. A maximum of 50% of the total capacity specified in the RfS can be allocated to a single bidder.

Power Purchase Agreement

The draft power purchase agreement (PPA) and draft power sale agreement (PSA) should be issued along with the RfS. The PPA period must generally be 20 years from the scheduled commercial operation date (SCOD) or the rescheduled supply commencement date. The PPA can also be set for a 25-year period.

The bidding parameter is the tariff quoted in ₹/kWh for the PPA period, and the capacity will be allocated based on the quoted tariff but only to bidders within a predefined “L1+x%” range from the L1 bidder. The procurer may choose an e-reverse auction for final selection and disclose incentives available to wind power generators.

A deviation settlement mechanism will be applicable for deviations from the schedule settled by the wind power generators. Payment security must be provided as per Electricity (Late Payment Surcharge and Related Matters) Rules, 2022, with developers eligible for coverage from the payment security fund by paying ₹0.02 (~$0.00024)/ kWh. Provisions for force majeure, generation compensation for off-take constraints, and the event of default must be included in the PPA.

The provisions for Change in Law in the PPAs must follow the Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021.

In power procurement, the bidding documents must specify a range for the capacity utilization factor (CUF), which will be calculated yearly. If the project generates and supplies less energy than the minimum CUF specified in the bid, the successful bidder will be responsible for paying a penalty to the Procurer. The penalty amount must be 50% of the PPA tariff for the shortfall in energy supply compared to the contracted CUF level, as per the terms of the PPA.

In case of availability of energy more than the maximum CUF specified, the generator would be free to sell it to any other entity provided the first right of refusal will vest with the procurers.

Bidding Process

The procurer must conduct the bidding process for wind power projects in the technical and financial bids, using e-bidding through a reliable e-procurement platform. The technical bids will be opened first, and only qualified bidders will have their financial bids opened.

The procurer may also choose an e-reverse auction for final selection, specified in the bid documents. Developers with existing capacity or untied capacity can participate. The procurer must prepare bidding documents under the guidelines and standard bidding documents, including the RfS, draft PPA, and draft PSA. The RfS notice must be published in at least two national newspapers and the procurer’s website for wide publicity.

A pre-bid conference must be held, and written clarifications must be provided to all bidders. Any revisions or amendments to bidding documents must be uploaded on the procurer’s website, giving bidders at least seven days to submit bids.

RfS Document

The RfS document will include the following standard provisions:

  • Bid Responsiveness: Bids must be evaluated only if they meet certain conditions, such as the bidder or its affiliates not being willful defaulters to any lender and not being blacklisted by any government agency, international financial institutions, or the United Nations.
  • Qualification Requirements: The procurer may specify technical criteria to ensure proper project implementation. Financial criteria must include a net worth requirement of at least 20% of the estimated capital cost for the wind power project or any other specified criteria. Bidders’ liquidity and financial capabilities will also be considered.
  • Earnest Money Deposit (EMD): The procurer must specify the EMD, which should not be less than 2% of the estimated capital cost of the wind power project. The EMD will be forfeited or lead to debarring if the wind power generator fails to execute the PPA within the stipulated time.
  • Compliance with FDI Laws: Foreign bidders selected as successful bidders must comply with all laws and provisions related to foreign direct investment in India.

Bid submission and evaluation

Bidders can form a consortium during the bidding process, designating a lead member for correspondence. The procurer must form an evaluation committee with at least three members, including a financial expert. Bidders must submit separate technical and price bids and a bid guarantee in the form of EMD.

Technical bids must be evaluated to check eligibility criteria compliance, and only qualifying bids proceed to price bid evaluation. To ensure competitiveness, a minimum of two qualified bidders is desired. Price bids deviating from bid conditions will be rejected without further clarification. The RfS must outline the detailed evaluation procedure and bidder selection.

Bidding timeline

The bidding process timetable allows a minimum of 22 days between issuing the RfS documents and the bid submission deadline.

The indicative timetable is as follows:

  • Issuance of RfS document, draft PPA, and other draft Project Agreements, including the PSA if applicable – zero date
  • RfS bid submission – 22 days from the zero date
  • Evaluation of financial bids and e-Reverse Auction – 99 days from zero date
  • Issuance of Letter of Award – 110 days from zero date
  • Signing of PPA and PSA – 140 days from the zero date

If there are any changes in the RfS document, additional time must be given to bidders. Under normal circumstances, the bidding process should be completed in around 110 days.

Contract award

The PPA must be signed by the successful bidder or the project company, which may be a special-purpose vehicle formed by the successful bidder. An Evaluation Committee must be formed to critically evaluate the bids and ensure conformity with the RfS provisions.

If the rates quoted in the bids do not align with prevailing market prices, the evaluation committee has the right to reject all bid bids. The procurer must publicly disclose the names of the successful bidders and the tariffs quoted, ensuring transparency by posting these details on their website for at least 30 days.

The distribution licensee must approach the Appropriate Commission within 15 days of discovering the tariffs for adoption. In case the Appropriate Commission does not decide within 60 days of submission or 120 days from the date of the power sale agreement, whichever is more, the procurer will grant an appropriate extension of time in SCOD to the generators, corresponding to the delay in adoption by the Appropriate Commission.

Performance Bank Guarantee

The wind power generator must submit an EMD along with their bid response. The EMD can be a bank guarantee or a payment-on-order instrument issued by the Indian Renewable Energy Development Agency, Power Finance Corporation Limited, or REC Limited.

Upon successful selection, the wind power generator must provide a PBG equal to 5% of the estimated capital cost for the wind power project or the limit stipulated by the Ministry of Finance, whichever is lower.

The PBG can be encashed to recover any damages or dues of the generator regarding the PPA. The Intermediary Procurer must credit these recovered damages or dues to the payment security fund they maintain.

The procurer may release the bank guarantees submitted as PBG if the generator can replace them with Payment on Order instruments from IREDA, PFC, or REC. Wind power generators can seek these replacements by offering security to the financial institutions mentioned.

The released bank guarantees must be returned to the generator within 45 days of the SCOD of the project or 45 days of the commencement of the power supply from the project’s part capacity.

Shareholding pattern

The successful bidder, whether a single company or a consortium, must ensure that its shareholding in the SPV executing the PPA remains above 51% for one year from the SCOD unless approved otherwise by the procurer.

If the successful bidder itself is executing the PPA, it must ensure that its promoters maintain control of the company for one year from the SCOD, except with the prior approval of the procurer. The successful bidder must provide information about its promoters and shareholding to the procurer before signing the PPA.

After the expiration of one year from the SCOD, any changes in the shareholding can be made with an intimation to the procurer.

Power Supply Commencement

The commencement of the supply schedule for power projects is as follows:

  • For projects up to 1,000 MW, the power supply must begin within 24 months of signing the PPA.
  • For projects over 1,000 MW, the power supply must begin within 30 months of signing the PPA.
  • If required, the procurer can adjust the SCOD for specific reasons.
  • The assumption is that the Appropriate Commission will adopt the tariff within 60 days of submission or 120 days from the date of the PSA. Any delay beyond this will extend the SCOD accordingly.

Part commencement of supply of power:

  • The procurer must accept part commencement of power supply, subject to a minimum capacity of 50% of the project capacity or 50 MW, whichever is lower, without penalty.
  • The minimum capacity for part commencement for inter-state projects will be 50 MW.
  • Projects can further commence supply in parts of at least 10 MW capacity, with the last part being the balance capacity.
  • The SCOD will not change due to part commencement of the power supply, and the PPA duration remains unaffected.

Early commencement of supply of power:

  • The wind power generator is allowed to commence supply from the whole or part capacity of the project before the SCOD, subject to transmission connectivity and long-term access.
  • In case of early commencement of supply, the procurers must purchase power at the PPA tariff.

Penalties for delay in commencement of supply of power:

  • For a delay of up to six months from SCOD, the PBG or alternate instruments will be encashed per day and proportionate to the contracted capacity that has not commenced supply.
  • For delays beyond six months from SCOD, the contracted capacity will be reduced to the project capacity that has commenced supply within the SCOD plus six months, and the PPA for the remaining capacity will be terminated.
  • The wind power generator will be debarred from participating in bids by any procurer or intermediary procurer for a certain period depending on the number of defaults (one year for the first default and 2 to 3 years for subsequent defaults.

The responsibility of getting transmission connectivity to the ISTS network under GNA regulation will lie with the generator and will be at the cost of the generator.

If the procurer or intermediate procurer has to deviate from these guidelines or the standard bidding documents, they must obtain approval from the Appropriate Government before starting the bidding process. The Appropriate Government will approve the deviation or request modifications to the bid documents within a reasonable time, not exceeding 60 days.

The government had introduced a dedicated RPO trajectory specifically for wind energy, which aims to stimulate power demand generated across various states. To further support this initiative, the government notified an advanced bidding schedule for procuring 10 GW of capacity annually from 2024 to 28.

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