Ministry Of Power Amends Solar Bidding Guidelines To Enhance Transparency And Efficiency

Posted On - 13 March, 2025 • By - King Stubb & Kasiva

Introduction

The Ministry of Power, Government of India, has introduced significant amendments to the Guidelines for Tariff-Based Competitive Bidding Process for Procurement of Power from Grid-Connected Solar PV Power Projects. Notified on February 12, 2025, these revisions aim to streamline solar power procurement, bolster accountability, and ensure a transparent and efficient bidding ecosystem. The amendments build upon previous updates dated July 28, 2023, November 17, 2023, and February 2, 2024, reflecting the government’s commitment to aligning India’s renewable energy sector with global best practices while addressing emerging challenges.

Explanation (Key Points)

  1. Location-Specific Bidding and Substation Specifications
    • A new clause (3.3) mandates developers to connect solar projects to specified sub-stations within the Inter-State or Intra-State Transmission System (ISTS/InSTS). This ensures grid stability and reduces transmission inefficiencies by pre-defining connectivity points.
  2. Stricter Penalties for Underperformance
    • Generators failing to meet the declared annual Capacity Utilization Factor (CUF) for two consecutive years (post-Commercial Operation Date) face penalties. Defaulting generators must pay damages equivalent to 24 months of tariff or the remaining PPA period, whichever is shorter. Persistent defaults may lead to PPA termination and additional liabilities.
  3. Clarity on Change in Law (CIL)
    • The revised guidelines align CIL provisions with the Electricity (Timely Recovery of Costs due to Change in Law) Rules, 2021. CIL events are now recognized from seven days prior to bid submission, ensuring developers account for regulatory shifts during planning.
  4. Timely Execution of Agreements
    • PPAs and Power Sale Agreements (PSAs) must be signed within 30 days of issuing the Letter of Award (LoA). Extensions up to 12 months are permissible, after which the LoA stands cancelled. Delays due to procurer-led extensions will not be treated as guideline deviations.
  5. Tariff Adoption Process
    • Distribution licensees or intermediary procurers must approach regulatory commissions within 30 days of tariff discovery (via e-reverse auctions) for formal adoption, ensuring swift implementation of competitive rates.
  6. Insurance Surety Bonds as Financial Instruments
    • In addition to Bank Guarantees, developers can now submit Insurance Surety Bonds under Earnest Money Deposit (EMD) and Performance Bank Guarantee (PBG) clauses. This diversifies financial security options, easing liquidity pressures on developers.
  7. PBG Encashment and Default Management
    • Procurers can encash PBGs to recover dues from defaulting generators. Recovered funds are credited to a Payment Security Fund, ensuring continuity in power supply obligations. PBGs must be returned within 45 days of project commissioning.
  8. Enhanced Technical Specifications
    • Developers must install GPS-enabled Automatic Weather Stations (AWS) to ensure accurate data collection, complying with technical standards set by central agencies. Cyber security compliance is mandatory, with adherence to regulations issued by central authorities.
  9. Standardization and Strict Adherence
    • Bids deviating from guidelines require prior approval from the Appropriate Commission, which must respond within 60 days. Pre-approved deviations (by state governments) are exempt, reducing bureaucratic delays.
  10. Focus on Technology and Transparency
    • Procurers must prioritize commercially proven technologies to minimize risks. Detailed technical parameters for solar PV and energy storage systems will be periodically updated by MNRE (Ministry of New and Renewable Energy).

Conclusion

The amended guidelines mark a paradigm shift in India’s solar power procurement framework, emphasizing accountability, technological reliability, and procedural transparency. By introducing stringent penalties, diversifying financial instruments, and mandating technical compliance, the Ministry of Power aims to attract credible investors, reduce project delays, and fortify grid resilience. These reforms align with India’s renewable energy targets, fostering a competitive yet equitable ecosystem that balances developer flexibility with procurer security. As the sector evolves, such proactive policy refinements will be pivotal in sustaining India’s leadership in the global energy transition.

https://solarquarter.com/wp-content/uploads/2025/02/260976.pdf