MoP Amends Guidelines for TBCB to Procure Firm Power from RE Projects with Storage

In a significant move to enhance the regulatory framework for renewable energy procurement, the Ministry of Power (MoP) has issued an amendment to the guidelines for Tariff-Based Competitive Bidding Process (TBCB) for procurement of firm and dispatchable power from grid connected renewable energy power projects with energy storage systems.

This amendment introduces key changes to the guidelines initially notified on June 9, 2023, and subsequently revised on November 17, 2023, and February 2, 2024.

One of the primary amendments involves modifications to Clause 3.1.1(b), which now mandates that the procurers seek approval from the Appropriate Commission for any deviations in the draft Request for Selection (RfS), Power Purchase Agreement (PPA), and Power Supply Agreement (PSA) from the guidelines and standard bidding documents (SBDs). However, if deviations were already approved by the government before the notification of these amendments, fresh approval will not be required.

Additionally, if the procurer provides detailed provisions consistent with the guidelines while preparing the project documents, such detailing will not be regarded as a deviation, even if such specifics are not included in the guidelines. A new Clause 3.3 has been introduced, allowing procurers to specify the sub-stations in the Inter-State Transmission System (ISTS) or Intra-State Transmission System (InSTS) where developers are required to connect their renewable energy power projects in the case of location-specific bids.

This addition aims to streamline the transmission process and ensure better coordination between developers and the power grid infrastructure. Further, significant changes have been made to Section 7.6(b) concerning the consequences of failing to maintain the minimum Capacity Utilization Factor (CUF). If a generator fails to meet the minimum CUF declared in the PPA for two consecutive years, excluding the first contract year ending on March 31 after the Project’s Commercial Operation Date (COD), the generator will be considered in default. In such cases, the yearly minimum CUF obligation will be reduced to the average CUF of the two default years. The generator will also be required to pay lump-sum damages equivalent to 24 months or the balance PPA period—whichever is shorter—of the agreed tariff. If the generator fails to pay these damages, it will constitute an event of default, allowing the procurer to terminate the PPA. Upon termination, the generator will be liable to pay similar damages for its contracted capacity. Clause 7.7 concerning the 'Change in Law/Regulation' has also been revised to align with the Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021, and any subsequent amendments. It defines a 'Change in Law' (CIL) as any event related to the project occurring from seven days prior to the last date of bid submission.

This clarification ensures greater regulatory certainty for both developers and procurers. The technical criteria outlined in Clause 9.2.1 have also been revised to promote broader participation while maintaining stringent implementation standards. Procurers are permitted to specify technical criteria to ensure proper project execution, provided they assess the number of eligible developers to maintain competitive bidding. Furthermore, developers must install and maintain GPS-enabled Automatic Weather Stations (AWS) adhering to technical standards specified by the relevant Central Government agencies.

The data from these stations must be made available to the appropriate Load Dispatch Centre, ensuring compliance with the Indian Electricity Grid Code. Additionally, developers must comply with applicable cybersecurity regulations and directives issued by the Central Government.

A new Clause 10.3 has been introduced to ensure timely finalisation of contractual agreements. It mandates that the signing of the PPA and PSA (if applicable) should be completed within 30 days of issuing the Letter of Award (LoA). This period can be extended to a maximum of 12 months, beyond which the LoA will be cancelled. The amendment clarifies that any extension provided by the procurer during the bidding process due to delays will not be considered a deviation from the guidelines.

Clause 11.4 has been updated to require the distribution licensee or the Intermediary Procurer to approach the Appropriate Commission for tariff adoption under Section 63 of the Electricity Act within 30 days of tariff discovery through the e-reverse auction or any other competitive bidding process. This measure is expected to enhance transparency and expedite the regulatory approval process.

The amendment also expands the range of acceptable financial instruments for securing projects. New provisions under Clause 12.1(a1) and Clause 12.2(a1) allow the use of Insurance Surety Bonds or other instruments approved under the General Financial Rules, in addition to the traditional Bank Guarantees, for establishing Earnest Money Deposits (EMD) and Performance Bank Guarantees (PBG). This flexibility aims to ease financial burdens on project developers while maintaining robust financial security for the procurers.

Moreover, Clause 12.3 has been revised to clarify that the PBG, or its approved alternatives, can be encashed to recover any damages or dues of the generator under the PPA. Any funds recovered in this manner will be credited to the Payment Security Fund maintained by the Intermediary Procurer. The PBG will be returned to the generator within 45 days of the actual commencement of power supply. In the case of partial project completion, the corresponding portion of the PBG will be released within the same timeframe.

These comprehensive amendments reflect the government's commitment to fostering a competitive, transparent, and resilient framework for renewable energy procurement.

By refining the technical, legal, and financial provisions, the Ministry of Power aims to accelerate the deployment of firm and dispatchable renewable energy projects integrated with energy storage systems, contributing to India's ambitious renewable energy targets.