Guidelines For Tariff Based Competitive Bidding for 1000 MW Wind Power Project

Introduction

Ministry of New and Renewable Energy of India has released scheme for installing 1000 MW of CTU connected Wind power plants in 2016-17 through competitive bidding on 14-06-2015, first of its kind for wind sector. Later on same date, MNRE also released draft guidelines for the bidding process and invited comments from the stakeholders on the same. The scheme will address India’s energy security challenge and will promote ecologically sustainable growth of power sector.

With a current installed capacity of 28.68 GW as per CEA India has only explored 9.5% of its total potential of 302 GW at 100 meter height above sea level as per studies of National Institute for Wind Energy (NIWE). Most of the India’s wind potential exist in the eight states namely Andhra Pradesh, Gujarat, Maharashtra, Karnataka, Madhya Pradesh, Rajasthan, Tamil Nadu and Telangana. GoI has set an ambitious target to install 60 GW by 2022 which requires the competitive and transparent framework for disbursement of wind projects. For the purpose MNRE has proposed guidelines for competitive bidding for wind projects and the comments are invited, the overview of which is as follows.

Objectives of Guidelines

  1. Promote competitive procurement of electricity from Renewable Energy Sources by distribution licensees;
  2. Facilitate transparency and fairness in procurement processes;
  3. Facilitate reduction of information asymmetries for various Bidders;
  4. Protect consumer interests by facilitating competitive conditions in procurement of electricity;
  5. Enhance standardisation  and  reduce  ambiguity  and  hence  time  for materialisation of projects;
  6. Provide flexibility to sellers on internal operations while ensuring certainty on availability of power and tariffs for buyers

Competitive bidding process

Sr no Process/Event Description
1. Tariff Structure determination · Fixed levellised tariff for the duration of PPA(preferably 25 years)

· Fixed + Escalable components, escalable components subject to change as per CERC norms

· Structure of PPA to contain duration of PPA ,terms of contract and quantum of power to be procured, risk allocation between parties, required technical requirements, force majeure clauses as per industry standards, penalties for default conditions and their cure.

· Payment security proposed to be offered by the procurer with the provision of Letter of Credit (LC) and LC backed by credible escrow mechanism

2. Preparation for inviting bids · Preparation of Standard Bid Document (SBD) issued by Central Government prior to Request for Selection Process (RfS)

· SBD along with Guidelines to pave the way for transparent and competitive bidding process, preparation for documents inviting bids

· To ensure serious participation of bidders, project preparatory activities are evaluated such as land acquisition, forest clearances, environmental clearances, technological tie-ups and water linkages in case of hybrid systems.

· Procurer shall invite project developer to establish the project on Build-Own-Operate basis.

· Technology neutral bids i.e. bidder may be free to choose the technology

3. Criteria for qualification of submitted bids Technical Parameters – The bidder should have designed, supplied,  installed and commissioned a Wind Power Project of minimum capacity of 25 MW at one location in last 7 years and working satisfactorily till the date of bid.

Financial parameters –  (i) The average annual  turnover of  the Bidder  in  the preceding  three financial years as on the date of Technical bid opening, shall not be less than INR 5.00 Crore/MW.

(ii) The net worth for the last year should not be less than INR 5.00 Crores Per MW.

4. Bidding Process Submission of RfS which includes

i)  Procurer’s requirements such as quantum of power required, term of contract proposed, expected date of supply from the bidder, delivery point, financial requirement, structure of tariff etc.

ii)  Payment of security by the procurer

iii) Bid evaluation methodology to be adopted by the Procurer including the discount rates for evaluating the bids.

iv) Minimum and maximum project size to be decided by the           procurer.

5. Bid Submission and Evaluation · At least two qualified bidders should be present for proceeding of bidding process. In case less than two bidders and the deliberation on the part of procurer, bidding process may be consented by Appropriate Commission

· Formation of Consortium of bidders is allowed and a lead bidder is selected for taking care of bid proceedings.

· Bid guarantee to eliminate non-serious bidders

· Technical and price bids are to submitted separately

· Technical bids are evaluated first to meet the RfS criteria on all technical evaluation parameters then qualified bids are evaluated according to price bids.

· Lowest bidder is awarded the bid and right to reject a bid if not aligned with prevailing market prices

· The  price  bid  shall  be  rejected,  if  it  contains  any  deviation  from  the  tender conditions for submission of price bids

6. Contract Award and Conclusion · The  PPA  shall  be  signed  with  the  selected  Bidder/SPV  consequent  to  the selection process in accordance with the terms and conditions as finalized in the RfS bid documents.

· After the conclusion of bidding process, the Evaluation Committee constituted for evaluation of RfS bids shall provide appropriate certification on conformity of the bidding  process  evaluation  according  to  the  provisions  of  the  RfS  document.

· For transparency purpose and as a sign of conclusion, the bidding process and result of the bids to be published on public forums.

7. Other Provisions · Arbitration in case where any dispute arises claiming any change  in or  regarding determination of the  tariff  or  any  tariff  related matters,  or which  partly  or wholly  could  result  in change  in  tariff,  such  dispute  shall  be  adjudicated  by  the  Appropriate Commission.

· Sharing of proceeds from Carbon credits and CDM (Clean Development Mechanism) benefits with the beneficiaries upto 50% starting from second year at 10% with an escalation of 10% each year.

· Provision for financial incentives like Accelerated Depreciation(AD), Generation Based Incentives(GBI),concessional customs and excise duties, tax holidays, moratorium periods etc.

Timelines for the Competitive bidding process

Sr. No. Event Time
1. Date of issue of RfS Zero date
2. Bid clarification, conferences etc. and revision of RfS **
3. RfS bid submission 45 days
4. Evaluation of bids and issue of Letter of Intent (LoI) 90 days
5. PPA becomes effective: Signing of agreements such as Share Purchase Agreements(SPA) and transfer of SPV, if applicable 120 days

** In case of change in RfS Document, the procurers shall provide Bidders additional time

 

Document Source – http://mnre.gov.in/file-manager/UserFiles/Draft-Wind-1000MW-Guidelines.pdf

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