CERC Approves Elaborate Changes to Bidding Guidelines for 1.5 GW of Solar

The Central Electricity Regulatory Commission (CERC) has allowed most of the changes and additions proposed by Rewa Ultra Mega Solar Limited (RUMSL), Madhya Pradesh Power Management Company Limited (MPPMCL), and West Central Railway in the bidding guidelines for 1,500 MW of grid-connected solar projects.

RUMSL, MPPMCL, and West Central Railway had filed a petition with the Commission requesting certain deviations in the guidelines in the bid process initiated for the 500 MW grid-connected solar projects in Neemuch Solar Park; 450 MW grid- solar projects in Shajapur Solar Park, and 550 MW grid-connected solar projects in Agar Solar Park.

The petitioners had requested the Commission’s approval for fifteen deviations to the solar bidding guidelines, including payment security mechanism, notification of ‘force majeure’ event, offtake constraints, default and termination consequences, and the event of default on account of the developer’s failure to supply energy as per the power purchase agreement (PPA) among others.

They also pursued the inclusion of ‘epidemic, pandemic, quarantine, lockdown or similar action ordered by any government authority as force majeure events, termination due to a non-natural force majeure event, quantum and mechanism for ‘change in law’ relief to be included in the draft request for proposal (RfP) and the PPAs.

Payment Security Mechanism

The Commission observed that the ‘letter of mandate’ issued directly to the Reserve Bank of India (RBI) would provide payment security and serve as an adequate substitute for a letter of credit or a payment security fund to be maintained with a scheduled bank. The Commission agreed to this change in the bidding guidelines.

The petitioners proposed that the Indian Railways authorize RBI to unconditionally debit the Indian Railways account maintained once a debit claim from the developers is received through the letter of mandate.

Force Majeure

Regarding notification of the ‘force majeure’ event, the regulator noted that the petitioners were suggesting changes to give sufficient time to notify all the effects of force majeure. As per the existing bidding guidelines, the affected party had seven days to give notice to the other party in case of a ‘force majeure’ event. The petitioners were asking for 15 days in place of seven days. The Commission agreed to provide more time as requested.

Generation Compensation in Case Transmission Infrastructure is Not Ready

In a case where the solar project is ready but the transmission infrastructure is not, leading to constraint in power evacuation; earlier, the compensation mechanism suggested generation loss be compensated by the excess generation by the developer in the succeeding three contract years. The procurer would buy such excess generation at the PPA tariff to offset the loss.

The new suggestions for generation compensation include four points:

• Developers will be compensated by providing a day-to-day extension to the scheduled commissioning date.
• Developers will be compensated by the procurers for the generation loss suffered.
• Developers will be compensated offtaking the excess generation beyond what is guaranteed in the PPA until it is fully compensated for the generation loss. In the case of Indian Railways, the excess generation purchased can be limited to 10% in a year, failing which MPPMCL will procure such excess generation to compensate the developer’s generation loss.
• If the transmission infrastructure is not ready even after the long stop date specified in the PPA, developers can terminate the PPA. RUMSL will be liable to refund all charges received from developers under the ‘Implementation Support Agreement’ until the termination, including the project development fees.

The Commission has agreed to all the four points suggested for generation compensation.

Grid Unavailability

For calculating losses due to grid unavailability, the exiting guidelines consider generation loss = [(average…