Government Revises TBCB Guidelines for Grid-Connected Solar PV Projects

The Ministry of Power (MoP) has introduced significant amendments to the Guidelines for Tariff-Based Competitive Bidding (TBCB) process for procuring power from grid-connected solar PV projects.

These changes update key provisions to streamline the bidding process, strengthen compliance, and align with evolving regulatory frameworks. The amendments follow the original guidelines issued on July 28, 2023, and previous modifications on November 17, 2023, and February 2, 2024.

One major change is the introduction of a new Clause 3.3, which allows procurers to specify the sub-stations in the Inter-State Transmission System (ISTS) or Intra-State Transmission System (InSTS) where solar PV developers must connect their projects. This provision is expected to improve the efficiency of power evacuation and facilitate better grid integration.

The revised guidelines also impose stricter penalties for failing to maintain the Capacity Utilisation Factor (CUF). If a generator fails to achieve the declared CUF for two consecutive years, excluding the first contract year ending on March 31 following the Commercial Operation Date (COD), it will be deemed in default. In such cases, the generator’s yearly CUF obligation will be reduced to the average CUF for the two default years, and the generator must pay lump-sum damages equivalent to 24 months’ tariff or the remaining PPA period, whichever is less. Non-payment of these damages could lead to the termination of the Power Purchase Agreement (PPA).

To ensure timely project implementation, the guidelines now mandate that PPAs and Power Sale Agreements (PSA) must be signed within 30 days of the Letter of Award (LoA). This timeline may be extended by up to 12 months, but failure to finalize the agreements within this period will result in LoA cancellation. This change aims to reduce delays in project commissioning and increase accountability in the bidding process.

The guidelines also revise the definition and handling of Change in Law (CIL) events. The updated Clause 6.7 clarifies that Change in Law provisions will be governed by the Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021, and any subsequent amendments. Additionally, the new definition considers CIL events occurring within seven days before the bid submission deadline, ensuring greater clarity for developers.

For tariff adoption, the guidelines now require the distribution licensee or intermediary procurer to approach the Appropriate Commission within 30 days of discovering the tariff through e-reverse auction or other competitive bidding processes. This measure is intended to expedite regulatory approval and facilitate quicker project execution.

A notable financial reform is the introduction of Insurance Surety Bonds and other instruments under the General Financial Rules (GFR) as acceptable alternatives to Bank Guarantees for both Earnest Money Deposit (EMD) and Performance Bank Guarantee (PBG). This change provides developers with greater financial flexibility and reduces the burden of securing large cash reserves. Additionally, PBGs can now be encashed to recover damages due from the generator under the PPA, with the proceeds credited to the Payment Security Fund. The guidelines also require PBGs to be refunded within 45 days of the project's actual supply commencement, including for partial capacity.

The updated technical specifications emphasize the adoption of commercially established Solar PV and Energy Storage Systems (ESS) to minimize technology risk and ensure timely project execution. Developers are also required to install GPS-enabled Automatic Weather Stations (AWS) to monitor real-time weather data, adhering to specifications provided by relevant Central Government agencies and Load Dispatch Centres. Furthermore, developers must comply with cybersecurity regulations, reinforcing the security of critical infrastructure.

Finally, the guidelines mandate strict adherence to the TBCB process under Section 63 of the Electricity Act. Any deviation from the guidelines requires prior approval from the Appropriate Commission, which must deliver its decision within 60 days. For bids where deviations were already approved before these amendments, no fresh approval is required.

These comprehensive amendments aim to enhance transparency, enforce regulatory compliance, and ensure efficient project implementation, aligning with India’s ambitious goal of achieving 500 GW of non-fossil fuel capacity by 2030.