The Ministry of Power has issued amendments to the guidelines for tariff-based competitive bidding for the procurement of power from grid-connected solar PV projects. These amendments modify various aspects of the bidding process to improve transparency, ensure reliability, and encourage investment in the sector.
One of the key changes introduces a provision allowing procurers to specify substations in the interstate and intrastate transmission systems where solar developers must connect their projects. This aims to streamline grid integration and improve efficiency in power evacuation.
The amendments also revise the capacity utilization factor (CUF) requirements for solar power developers. If a developer fails to maintain the minimum CUF for two consecutive years after the first contractual year, they will be considered in default. This could result in financial penalties equivalent to 24 months of tariff payments or the remaining contract period, whichever is shorter. If the developer is unable to pay these penalties, the power purchase agreement (PPA) may be terminated, and additional compensation will be required.
Changes in law or regulation affecting the project will now be governed by the Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021. The amendments define “change in law” as any project-related event occurring seven days before the bid submission deadline. This aims to provide clarity and reduce legal uncertainties for developers.
A new provision mandates that the signing of PPAs and power supply agreements (PSAs) should be completed within 30 days from the issuance of the Letter of Award (LoA). This period may be extended up to 12 months, after which the LoA will be canceled. This measure is expected to accelerate project implementation and reduce delays.
Another significant change requires that tariffs discovered through the competitive bidding process must be adopted by the appropriate regulatory commission within 30 days of finalization. This ensures timely approval and implementation of solar projects.
To strengthen financial security, new instruments such as insurance surety bonds have been introduced for earnest money deposits and performance bank guarantees. These will function similarly to traditional bank guarantees and provide alternative financial instruments for developers.
The amendments also introduce stricter compliance measures for project developers. If a developer defaults, the performance bank guarantee can be encashed, and the recovered funds will be credited to the payment security fund. This provision enhances financial discipline and ensures stability in project execution.
The guidelines also mandate the use of GPS-enabled automatic weather stations for solar projects to ensure accurate data collection and monitoring. These stations must comply with technical specifications set by the Ministry of New and Renewable Energy (MNRE) and other relevant authorities.
Cybersecurity compliance has also been emphasized, with developers required to follow cybersecurity regulations and directives issued by central government authorities. This aims to safeguard solar power infrastructure from cyber threats.
The amendments reinforce the need for standardization and transparency in the bidding process. All procurements must strictly adhere to these guidelines, and any deviation must be approved by the relevant regulatory commission before the bidding process begins. If deviations were previously approved by the government before these amendments, fresh approval is not required.
These changes are expected to strengthen India’s solar sector by ensuring efficient project implementation, regulatory clarity, and financial security for stakeholders. The government aims to create a more transparent and reliable framework for renewable energy procurement, supporting the country’s clean energy transition.
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