MNRE guidelines for tariff-based competitive bidding to increase affordability of solar power

New Delhi [India], August 26 (ANI): The latest guidelines issued by the Ministry of New & Renewable Energy (MNRE) for tariff-based competitive bidding process for procurement of solar power is projected to enhance transparency and profitability, which will subsequently transpire onto making solar power more affordable in the days to come, the Ministry has said.

The guidelines, which were released by the MNRE earlier this month, have been chalked out for tariff-based competitive bidding process for procurement of power from grid connected solar PV power projects, prioritizing consumer interests by providing affordable power, the Ministry has said in a press release.

The guidelines were issued for long term procurement of electricity by the distribution licensees, or the authorized representative(s), or an intermediary procurer, from grid-connected solar PV power projects of 5 MW and above, through competitive bidding.

To increase transparency and fairness in the procurement process, the guidelines will provide standardisation and uniformity in processes and a risk-sharing framework between various stakeholders involved in the solar PV power procurement, which will in turn help in reducing off-taker risk, thereby encouraging investments, enhancing bankability of the projects and improving profitability for the investors.

The government has kept the minimum power purchase agreement (PPA) tenure at 25 years to ensure lower tariffs, from the scheduled commissioning date, with the prohibition of unilateral termination or amendment of the PPA. This has incentivised early commissioning and part commissioning of projects, the Ministry has claimed.

MNRE has also provisioned a payment security mechanism through instruments like Letter of Credit (LC), Payment Security Fund, State Guarantee, in order to tackle the risk of generator's revenue getting blocked due to delayed payment or non- payment by the procurers.

Additionally, the Ministry has said that, "In the event of any default, payment or otherwise, consequences have been clearly defined to ensure optimal risk sharing between the developer and procurer".

It further said, "Issues related to land, connectivity, clearances and the extension in case of delay, have also been streamlined".

MNRE has also emphasized on e-bidding, quantifiable in both power (MW) and energy (kWh) terms, aiming to improve transparency, the release stated. (ANI)

This story has not been edited. It has been published as provided by ANI