The Ministry of Power (MoP) has proposed amendments to the guidelines for the tariff-based competitive bidding process to procure power from grid-connected power projects. These revisions apply to solar, wind, wind-solar hybrid, and firm and dispatchable power from renewable energy projects with energy storage systems.

PSA Approval Timeline

According to the proposed amendments, all projects will have a fixed timeline for regulatory approvals.

The amendments would require that when power procurement involves an intermediary agency and the end buyer is a distribution licensee, the latter must obtain regulatory approval for the power sale agreement (PSA) within 30 days of signing it. Such requirements apply to cases where prior approval was not obtained.

These provisions aim to avoid prolonged delays in obtaining regulatory clearance for PSAs. They apply uniformly to all types of renewable projects, including solar, wind, hybrid, and energy storage-linked generation.

SCSD Extensions

In cases where the appropriate regulatory commission fails to approve either the tariff or the PSA within 60 days of submission or 120 days from the date of the PSA, the project developer would be granted an extension for the scheduled commissioning and supply date (SCSD).

The extension would be based on the number of days there is a delay in tariff adoption or PSA approval, whichever is longer. It aims to ensure that developers are not penalized for regulatory inaction.

The government has also clarified that if delays occur in both tariff adoption and PSA approval, the longer of the two delays will be considered when granting the SCSD extension.

PBG Slashed to 3%

The proposed amendments aim to reduce the performance bank guarantee (PBG) requirement to 3% of the estimated cost for the relevant financial year, down from the earlier 5% of the estimated project or capital cost.

The PBG amount will be specified in the bid documents and must be submitted at the time of signing the power purchase agreement. In the case of wind projects, the amount must also conform to the limits specified by the Ministry of Finance.

In February this year, the Ministry introduced several amendments to the competitive bidding guidelines, including compensation mechanisms for failure to meet the minimum capacity utilization factor and location-specific bid requirements.

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