Centre issues bid guidelines  for procuring wind power:

Centre issues bid guidelines  for procuring wind power:

Context

The government on Tuesday issued guidelines for the procurement of wind power through a bidding process

What has been done?

The government has issued guidelines for the procurement of wind power through a bidding process, which included the standardisation of the process and a definition of the roles and responsibilities of various stakeholders

Guidelines applicable to

The guidelines are applicable for procurement of wind power from grid-connected wind power projects (WPP) having-

• individual size of 5 MW and above at one site with minimum bid capacity of 25 MW for intra-state projects; and
• individual size of 50 MW and above at one site with minimum bid capacity of 50 MW for inter-state projects,

What do the guidelines include?

The guidelines include

• Provisions for compensation in case of grid unavailability
• Put out a payment security mechanism
• Standardise the bidding process, and
• Spell out the risk-sharing framework among stakeholders

Views of the ICRA

• Payment security mechanism along with being favourable for developers will also improve the bankability of the PPA document
• Measures on compensation for grid curtailment and termination payments, if implemented, is favourable for the wind power developers and improves the bankability of the PPA document
• Most PPAs so far did not provide for a termination clause and termination payments to the developers in case the developer decided to terminate the PPA due to a default by the procurer
  • In this context, the provisions for termination liability, which, along with substitution rights as approved in bidding guidelines, are expected to provide greater protection to the developers and the lenders

Centre’s expectations

The guidelines are expected to encourage windy States to opt for the bidding process for the procurement of wind power