The Ministry of Power has issued a resolution notifying the Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Solar PV Power Projects. The guidelines are aimed at enabling the procurement of solar power from grid-connected Solar Photovoltaic (PV) power projects through tariff-based competitive bidding. This resolution was published and comes into effect from 28th July, 2023.
The key objective behind these guidelines is to reduce the overall power purchase costs for distribution licensees, which constitute the largest cost element. By introducing competitive bidding in the procurement process, the government aims to facilitate the development of power markets and subsequently lower electricity prices, leading to substantial benefits for consumers.
The specific objectives of these new guidelines are as follows:
- To promote competitive procurement of electricity from solar PV power plants by distribution licensees.
- To facilitate Solar PV capacity addition and meet the Renewable Purchase Obligation (RPO) and Energy Storage Obligations (ESO) requirements of DISCOMs (Distribution Companies).
- To establish a transparent, fair, and standardized procurement framework based on open competitive bidding. The framework aims to ensure appropriate risk-sharing among stakeholders, enabling the procurement of power at competitive prices that are in the interest of consumers, improving project bankability, and ensuring reasonable returns to investors.
- To provide a framework for inter-state and intra-state, long-term, sale-purchase of power, aiming to further de-risk the sector.
The guidelines’ scope covers long-term procurement of solar power by “Procurers” from Solar PV Power Projects with or without Energy Storage through competitive bidding. Upon their official notification, the previous guidelines for tariff-based competitive bidding, issued in various resolutions from 2017 to 2020, will no longer be applicable for tenders issued after the issuance of these new guidelines. However, projects already awarded, under implementation, or commissioned under the previous bidding guidelines will continue to be governed by those rules and will not be affected by the new guidelines.