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.

Next Story
Real Estate

Driven Opens Dubai’s Largest Real Estate Office in Downtown

Driven | Forbes Global Properties has officially inaugurated its new 43,000-sq-ft headquarters in Downtown Dubai, just steps away from the Burj Khalifa. Spread across two floors, the office now holds the distinction of being Dubai’s largest real estate workspace. The move follows the firm’s AED 505 million acquisition of Emaar Square Building 3 in November 2024. This strategic expansion marks a significant milestone in the company’s long-term growth plan and reflects its deepening commitment to the UAE’s evolving real estate market. As Dubai moves steadily toward becoming a tier-o..

Next Story
Resources

Johnson Controls Marks 140 Years of Innovation Globally

Johnson Controls (NYSE: JCI), the global leader in smart, healthy, safe and sustainable building solutions, is celebrating 140 years of innovation and global impact. Since its founding in 1885, the company has pioneered building advancements—from developing the first automatic sprinkler system to the first room thermostat—and today delivers a broad portfolio of HVAC systems, fire protection, and smart security solutions across the full building lifecycle. As Singapore celebrates SG60, marking 60 years of independence, Johnson Controls congratulates the nation and highlights its ongoin..

Next Story
Equipment

MHI to Supply Water Pumps for China’s Sanmen Nuclear Plant

Mitsubishi Heavy Industries, (MHI) has secured an order to supply four circulating water pumps (CWPs) for Units 5 and 6 of the Sanmen Nuclear Power Plant in China. The order has been placed in collaboration with Dongfang Electric Machinery Co. (DFEM), a core company of the Dongfang Electric Group, one of China’s top three heavy electrical equipment manufacturers. This marks the first collaboration between MHI and DFEM, under which both companies plan to jointly expand their presence in the circulating water pump market for nuclear power plants in China. The Sanmen Nuclear Power Pla..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?