Delays in Power Supply Commencement from Renewable Projects Won’t Face Penalties

Earlier, the generator faced debarment from participating in bids


The Ministry of Power (MoP) has amended the guidelines to the tariff-based competitive bidding process for the procurement of firm and dispatchable renewable power from grid-connected solar, wind, wind-solar hybrid, and renewable energy projects with energy storage.

The revised guidelines removed the clause relating to punitive measures for delays in the commencement of power supply.

Earlier, if there was a delay in commencing power supply beyond the scheduled commercial operation date (SCOD) up to six months, the generator was liable for penalties, including encashment of the performance bank guarantee or alternative instruments on a per-day basis proportionate to the contracted capacity that has not initiated power supply.

For delays exceeding six months from the SCOD, the contracted capacity was reduced to the project capacity that has initiated power supply within the SCOD plus six months.

Consequently, the power purchase agreement (PPA) for the remaining contracted capacity, which has not started the power supply, was also terminated.

Under the earlier guidelines, the generator was also at risk of being debarred from participating in bids issued by any procurer or intermediary procurer as follows:

  • For one year, in case of the first default
  • For not less than two years and not more than three years for the second and any subsequent defaults

The developer or the power generator is usually expected to initiate the power supply generally within the following timeframe:

  • 24 months from the execution date of the PPA for allocations not exceeding 1 GW
  • 30 months from the execution date of the PPA for allocations exceeding 1 GW

However, if there is a need to adjust the SCOD period for any reason, the procurer now has the flexibility to do so.

Mercom Research feels that this relaxation might lead to delays in the installation and commissioning of projects.

Last year, the Ministry of New and Renewable Energy directed public sector undertakings to blacklist renewable energy developers that fail to complete the project within the deadline. The ministry said that the blacklisting could span 3-5 years.

During the second quarter of 2023, solar project delays and postponements led to a 46% decline in investments.