MoP Amends TBCB Guidelines for Grid-Connected Wind-Solar Hybrid Projects

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

These updated guidelines, originally issued on August 21, 2023, and subsequently revised on November 17, 2023, and February 2, 2024, aim to bring greater clarity to the bidding process, enhance competition, and ensure smoother project execution.

The changes address critical aspects such as location-specific bids, legal provisions, technical compliance, and financial guarantees.

One of the major changes introduced is the addition of Clause 5.3, which allows procurers to specify the substations where developers must connect their wind-solar hybrid projects. This applies to both the Inter-State Transmission System (ISTS) and the Intra-State Transmission System (InSTS).

This amendment is expected to ensure better planning and management of transmission infrastructure, minimising bottlenecks and enhancing grid stability. By allowing location-specific bids, the government aims to streamline the integration of renewable energy into the national grid, ensuring more efficient distribution and reducing curtailment risks.

A critical revision has also been made to the 'Change in Law' provision under Clause 7.4', which now aligns with the 'Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021. Under this new provision, any event or regulatory change that occurs seven days prior to the last date of bid submission will be considered under the scope of 'Change in Law.'

This amendment provides much-needed legal clarity for developers and ensures a transparent mechanism for recovering additional costs arising from unforeseen regulatory changes. It also mitigates financial uncertainties, enabling developers to plan their investments with greater confidence. The government has further tightened compliance requirements by revising the 'Minimum Capacity Utilisation Factor (CUF)' obligation under Clause 7.7(b). If a generator fails to maintain the declared minimum CUF for two consecutive years, excluding the first year ending on March 31 after project commissioning, it will be treated as an event of default.

In such cases, the generator must pay lump-sum damages equivalent to 24 months of the tariff or the remaining PPA period, whichever is shorter. Failure to make this payment may result in termination of the Power Purchase Agreement (PPA), with additional penalties imposed for the contracted capacity.

This stricter CUF enforcement aims to ensure consistent power generation and protect the interests of both procurers and consumers.The amendments also introduce Clause 9.2.1, which strengthens technical criteria to ensure better project monitoring and data accuracy. Developers are now required to install GPS-enabled Automatic Weather Stations (AWS) to provide real-time weather data in compliance with standards set by Load Dispatch Centres and the Indian Electricity Grid Code.

This measure is intended to improve grid management and ensure more accurate forecasting of renewable energy generation. Additionally, developers must adhere to the latest cybersecurity guidelines issued by Central Government authorities, reflecting growing concerns about protecting critical infrastructure from cyber threats.

To expedite the project development cycle, a new Clause 11.2 mandates that the signing of Power Purchase Agreements (PPA) and Power Sale Agreements (PSA) must be completed within 30 days of issuing the Letter of Award (LoA). This period may be extended by mutual agreement up to 12 months, but if the agreements are not signed within this timeframe, the LoA will be cancelled.

This change aims to reduce delays in project execution and ensure a faster rollout of renewable energy capacity. Another notable change concerns the tariff adoption process. According to Clause 12.4, procurers are now required to approach the Appropriate Commission within 30 days of discovering the tariff through a transparent competitive bidding process. This amendment is expected to accelerate the regulatory approval process, ensuring that project timelines are not hampered by administrative delays.

Further, in a move to ease financial burdens on developers, the government has expanded the range of acceptable payment instruments. Clause 13.1(a1) and Clause 13.2(a1) now permit the use of Insurance Surety Bonds in place of traditional Bank Guarantees for both Earnest Money Deposits (EMD) and Performance Bank Guarantees (PBG). This measure, which aligns with the General Financial Rules, offers developers greater financial flexibility and reduces upfront capital requirements. Additionally, Clause 13.3 allows the encashment of PBGs to recover any damages or dues under the PPA, with recovered funds being credited to the Payment Security Fund maintained by the procurer.

PBGs must be returned within 45 days of the commencement of power supply, ensuring timely closure of financial commitments. The amendments also address the issue of deviations from the standard bidding guidelines. Clause 19 specifies that any deviations must receive approval from the Appropriate Commission before the bidding process begins. The commission is required to respond to such requests within 60 days, providing a clear timeline for decision-making. Notably, any deviations already approved by the government before these amendments do not require further review, ensuring continuity for projects currently underway.

These updated guidelines represent a significant step in India’s push to achieve 500 GW of non-fossil fuel capacity by 2030. With India’s electricity demand projected to exceed 400 GW by 2030, these amendments play a crucial role in ensuring energy security and advancing the nation’s renewable energy ambitions.