Government Eases Norms for Grid Connected Wind Projects

The Ministry of New and Renewable Energy (MNRE) has made amendments to the tariff bidding process for wind energy projects, in a move to reduce investment risk and incentivise faster project completion in the sector.

The guidelines, which were last notified on 8th December, 2017, are meant exclusively for grid connected projects.

The following changes have been made:

1- The timeline for land acquisition for wind power projects has been extended from seven months to scheduled commissioning date, i.e. 18 months. This will help wind power project developers in states where land acquisition takes longer time.

2- The window for revision of declared capacity utilisation factor (CUF) of wind power project has been increased to three years. The declared CUF is now allowed to revise once within three year of commercial operation date, which was earlier allowed within one year only.

3- The penalty on shortfall in energy corresponding to the minimum CUF,  has now been fixed @ 50% (fifty percent) of the PPA (Power Purchase Agreement) tariff for the shortfall in energy terms liable to be paid by the wind power generator to the procurer. Further, the penalty shall be passed on by the intermediary procurer to the end procurer after deducting the losses of intermediary procurer.

4- In cases of early part commissioning, the procurer may purchase the generation, at full PPA tariff.

5- Commissioning schedule of wind power project has been defined as 18 (eighteen) months from the date of execution of the PPA or PSA (Power Selling Agreement), whichever is later.

For the wind energy sector which, much like the solar sector, has seen a significant slowdown in the past year especially due to land acquisition issues in Gujarat, the amendments should come as some relief but probably for future projects rather than ongoing projects.

The delays in Gujarat have already led to a delay by over 12 months for most, and will easily extend to 18 months now even if resolved quickly.

The penalty clauses, or even the early procurement for quick projects, is a welcome move, as it helps clear the air on recourse during these situations.