Ministry of Power today said it has issued guidelines to procure wind power through ‘transparent’ tariff based competitive bidding process.
Ministry of Power today said it has issued guidelines to procure wind power through ‘transparent’ tariff based competitive bidding process.
Government has issued guidelines providing a framework for procurement of wind power through a "transparent process" of bidding including standardisation of the process and defining of roles and responsibilities of various stakeholders.
“These guidelines aim to enable the distribution licensees to procure wind power at competitive rates in a cost effective manner,” read the gazette published by Ministry of Power.
The guidelines are applicable for procurement of wind power from grid-connected Wind Power Projects (WPP) having individual size of 5 Mega Watt (MW) and above at one site with minimum bid capacity of 25 MW for intra-state projects; and individual size of 50 MW and above at one site with minimum bid capacity of 50 MW for inter-state projects.
“These guidelines will give boost to the wind power sector as it would facilitate the windy states to go for bidding process for procurement of wind power themselves. After transition of tariff regime from feed in tariffs to bidding route, it was mainly central government bids through SECI which were helping the sector. State bids from Tamil Nadu and Gujarat had objections from the wind sector in absence of guidelines,” the ministry’s announcement statement said.
Commenting on the issuance of guidelines, ICRA Ratings observed, “The guidelines address some of the key concerns for the sector pertaining to off-taker’s credit profile, grid curtailment and termination payments. The guidelines require the procurers to direct sign power purchase agreements (PPAs) with wind power developers to provide a payment security through letter of credit equivalent to one month average billing and a payment security fund to support payment for at least three months of receivables for the projects tied up.
"In addition, the procurer may also choose to provide state government guarantee in a legally enforceable form, both for payment of energy charges and termination compensation.”
As per the latest set of rules, the developer will have to compensate the procurer in case of the generation falls below a prescribed Capacity Utilisation Factor (CUF) agreed at the time of signing of the PPA. The minimum declared CUF should be 22% as per new guidelines.
The norms are important as the government had decided to put for bidding 10 GW wind capacities each in the fiscal years 2018-19 and 2019-20 to meet the target of 60 GW of power generation through clean energy by 2022. The present wind power installed capacity is 32 GW.
In the two rounds this year, the government has 2 GW wind capacity. As part of the third round, government has floated tender for another 2 GW capacity.
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