Ministry of Power eliminates penalties for RE power delays
POWER & RENEWABLE ENERGY

Ministry of Power eliminates penalties for RE power delays

The Ministry of Power (MoP) has made revisions to the guidelines governing the tariff-based competitive bidding process for procuring firm and dispatchable renewable power from grid-connected solar, wind, wind-solar hybrid, and renewable energy projects with energy storage.

The updated guidelines eliminate the provision concerning punitive measures for delays in initiating power supply. Previously, if the power supply commencement exceeded the scheduled commercial operation date (SCOD) by up to six months, the generator faced penalties, including the encashment of the performance bank guarantee or alternative instruments on a per-day basis proportional to the contracted capacity not delivering power.

For delays surpassing six months from the SCOD, the contracted capacity was reduced to the project capacity that had initiated power supply within the SCOD plus six months. Consequently, the power purchase agreement (PPA) for the remaining contracted capacity, which had not commenced power supply, was terminated.

Under the prior guidelines, generators risked being debarred from participating in bids by any procurer or intermediary procurer for one year after the first default and for not less than two years and not more than three years for the second and subsequent defaults.

Typically, developers or power generators were expected to initiate power supply within 24 months from the PPA execution date for allocations not exceeding 1 GW and within 30 months for allocations exceeding 1 GW. However, the procurer now has the flexibility to adjust the SCOD period if needed.

Mercom Research suggests that this relaxation might result in delays in project installation and commissioning. In the previous year, the Ministry of New and Renewable Energy instructed public sector undertakings to blacklist renewable energy developers failing to complete projects within deadlines, with potential blacklisting spanning 3-5 years. During the second quarter of 2023, solar project delays and postponements led to a 46% decline in investments.

The Ministry of Power (MoP) has made revisions to the guidelines governing the tariff-based competitive bidding process for procuring firm and dispatchable renewable power from grid-connected solar, wind, wind-solar hybrid, and renewable energy projects with energy storage. The updated guidelines eliminate the provision concerning punitive measures for delays in initiating power supply. Previously, if the power supply commencement exceeded the scheduled commercial operation date (SCOD) by up to six months, the generator faced penalties, including the encashment of the performance bank guarantee or alternative instruments on a per-day basis proportional to the contracted capacity not delivering power. For delays surpassing six months from the SCOD, the contracted capacity was reduced to the project capacity that had initiated power supply within the SCOD plus six months. Consequently, the power purchase agreement (PPA) for the remaining contracted capacity, which had not commenced power supply, was terminated. Under the prior guidelines, generators risked being debarred from participating in bids by any procurer or intermediary procurer for one year after the first default and for not less than two years and not more than three years for the second and subsequent defaults. Typically, developers or power generators were expected to initiate power supply within 24 months from the PPA execution date for allocations not exceeding 1 GW and within 30 months for allocations exceeding 1 GW. However, the procurer now has the flexibility to adjust the SCOD period if needed. Mercom Research suggests that this relaxation might result in delays in project installation and commissioning. In the previous year, the Ministry of New and Renewable Energy instructed public sector undertakings to blacklist renewable energy developers failing to complete projects within deadlines, with potential blacklisting spanning 3-5 years. During the second quarter of 2023, solar project delays and postponements led to a 46% decline in investments.

Related Stories

Gold Stories

Next Story
Resources

Schindler named among Forbes’ World’s Best Employers 2026

Schindler has been named among Forbes’ World’s Best Employers 2026, a global ranking recognising companies for their workplace environments.Compiled by Forbes in partnership with Statista, the ranking is based on independent employee feedback, including whether employees would recommend their organisation to friends and family.The company said the recognition reflected its focus on creating a workplace where employees can develop their expertise and build careers. ..

Next Story
Infrastructure Urban

India needs an export-execution mindset: Vishesh Jain

Interview with Vishesh Jain, Founder & CEO, EximpleWhat gaps in India’s global trade ecosystem led you to build Eximple, and what problem did you see businesses struggling with most?Eximple came out of a problem that all three founders had seen from different choke points in the trade ecosystem. India has millions of MSMEs and manufacturers, and many of them can make products that are genuinely competitive on quality. Yet only a small fraction is able to build meaningful international businesses. In our experience, the gap is usually not manufacturing capability; it is the ability to exe..

Next Story
Building Material

Nuvoco reports 13.5% revenue growth in Q2 FY27

Nuvoco Vistas Corp. Ltd. reported consolidated revenue of Rs 27.9 billion for Q2 FY27, up 13.5% year on year. Cement sales volume rose 9% to 4.7 million tonnes (MMT), while EBITDA increased 11% to Rs 4.11 billion.The company said it began its cement operations in 2014 with a 2.3 MMT per annum (MMTPA) operation at Nimbol. It now aims to reach 35 MMTPA of cement capacity by FY28, nearly 15 times its initial capacity. Its portfolio spans cement, ready-mix concrete and modern building materials.On sustainability and cost efficiency, Nuvoco partnered with CleanMax for a 46.4 MW wind-solar hybrid re..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code