The Central Government has announced significant amendments to the procurement of solar and renewable energy projects. These amendments were published on February 12, 2025.
The amendments pertain to the following guidelines:
- Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Solar PV Power Projects
- Guidelines for Tariff Based Competitive Bidding Process for Procurement of Firm and Dispatchable Power from Grid Connected Renewable Energy Power Projects with Energy Storage Systems
I. Procurement of Power from Grid Connected Solar PV Power Projects
The present amendments build upon previous revisions made in July and November 2023, and February 2024. They address various aspects of the bidding process, from location specificity to financial security and technical standards.
Technical Specifications
Procurers must promote commercially and operational technologies to minimize the technology risk and to achieve the timely commencement of supply from the Projects. The detailed technical parameters for Solar PV/ Energy Storage Systems shall be as specified by MNRE from time to time.
Guideline Compliance
Strict adherence to these guidelines is mandatory. Any deviations must be approved by the Appropriate Commission before the initiation of the bidding process.
If deviations were approved by the Appropriate Government prior to these amendments, fresh approval is not required.
II. Procurement of Firm and Dispatchable Power from Grid Connected Renewable Energy Power Projects with Energy Storage Systems
The present amendments build upon previous revisions made in June and November 2023, and February 2024.
These amendments aim to further refine and streamline the procurement process. These changes build upon previous amendments and are designed to enhance the reliability and dispatchability of renewable energy sources by integrating energy storage systems.
Deviation Approvals
Clarification has been provided regarding deviation approvals. If procurers provide detailed provisions in the RfS, PPA, and PSA that are consistent with the guidelines, such detailing will not be considered deviations, even if not explicitly stated in the guidelines.
If deviations were approved by the Government prior to these amendments, fresh approval by the Appropriate Commission is not required.
Technical Criteria
Procurers may specify technical criteria to ensure proper project implementation and adequate competition.
Common Guidelines for Both Types of Projects
Power Purchase Agreement (PPA) and Power Sale Agreement (PSA) Signing
PPA and PSA (if applicable) signing should be completed within 30 days of the Letter of Award (LoA) issuance. This period can be extended up to 12 months, beyond which the LoA will be cancelled.
Location Specific Bids
Procurers can now specify the substations in the Inter-State Transmission System (ISTS) or Intra-State Transmission System (InSTS) where developers must connect their solar PV power or renewable energy projects, allowing for more targeted development.
Capacity Utilization Factor (CUF) Default
The guidelines have been modified regarding CUF defaults. If a generator fails to maintain the declared minimum CUF for two consecutive years (excluding the first contract year), their yearly minimum CUF obligation will be reduced to the average of the actual CUF for those two years.
The generator will also be obligated to pay lump-sum damages equivalent to 24 months, or the remaining PPA period, of the tariff for the reduction in yearly minimum CUF obligation. Failure to pay the lump sum damages can lead to PPA termination.
Change in Law/Regulation
Change in Law provisions will now align with the Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021, and subsequent amendments.
The term “Change in Law” will refer to events occurring from seven days prior to the last day of Bid Submission.
Tariff Adoption
Distribution licensees or Intermediary Procurers must approach the Appropriate Commission for tariff adoption within 30 days of tariff discovery through e-reverse auctions or other transparent competitive bidding processes.
Earnest Money Deposit (EMD) and Performance Bank Guarantee (PBG)
Insurance Surety Bonds and other instruments approved by the General Financial Rules are now acceptable alternatives to traditional Bank Guarantees for EMD and PBG.
PBG can be encashed to recover any damages/dues of the generator. Any damages/dues recovered by the Intermediary Procurer by encashing the PBG, will be credited to the Payment Security Fund.
Common Technical Criteria
Developers must install and maintain GPS-enabled Automatic Weather Stations (AWS) as per specified standards.
Compliance with applicable cybersecurity regulations is mandatory.
PBG Return
PBG shall be returned to the generator within 45 days of the actual commencement of supply date of the project. In case of part commencement of supply of power, PBG corresponding to such part capacity, should be released within 45 days of the actual commencement of supply date.
