MNRE Eases Norms Bidding on Solar Power Projects

MNRE has issued amendments to the guidelines for the tariff-based competitive bidding process for procurement of power from grid-connected solar projects

The Ministry of New and Renewable Energy (MNRE) has issued amendments to the guidelines for the tariff-based competitive bidding process for procurement of power from grid-connected solar PV power projects.

The guidelines, which were last modified on January 9, 2019, are meant exclusively for grid-connected solar projects.

The following changes have been made:

1. As per the amendment, the Performance Bank Guarantee (PBG) submitted by a solar power generator can as always be encashed to recover any damages/dues of the generator in terms of the PPA. But now, the damages/dues recovered by the intermediary procurer by encashing the PBG, upon the default of the generator under the Power Purchase Agreement (PPA), shall be credited to the Payment Security Fund (instead of being passed on to the end procurer) to be maintained by the intermediary procurer under the ‘Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Solar PV Power Projects”.

1. The successful bidder, if being a single company, shall ensure that its shareholding in the SPV/project company executing the PPA shall not fall below 51 percent at any time prior to 3 (earlier 1) years from the commercial operations date (COD), except with the prior approval of the procurer. In the event the successful bidder is a consortium, then the combined shareholding of the consortium members in the SPV/project company executing the PPA, shall not fall below 51percent at any time prior to 3 (earlier 1) years from the COD.

1. Further, the successful bidder shall ensure that its promoters shall not cede control of the bidding company/ consortium till 3 (earlier 1) years from the COD. In this case, it shall also be essential that the successful bidder shall provide the information about its promoters and their shareholding to the procurer before signing of the PPA.

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