Recent competitive bidding Outline for setting up of 1000 MW ISTS connected wind Project (as on 04/05/2017)

In the global scenario, competitive bidding as a mechanism for allocating renewable energy capacity is increasingly being implemented with varying degrees of success. In the recent context, maximum countries like China, Brazil, India, Morocco, and Peru conducted bidding for renewable energy. In India, procurement of electricity through competitive means is also recommended in various policies such as the National Electricity Policy, National Tariff Policy, and the National Action Plan on Climate Change.

To achieve 60 GWs of wind energy till 2022 (Now 32.279 GWs as per March 2017 by CERC), Ministry of Power under Govt. of India created many schemes such as Non-solar RPO, competitive bidding and reverse bidding for achieving the target. Such one of the scheme is ‘Setting up of 1000 MW Interstate transmission system (ISTS) connected wind project’.

Ministry of Power (MoP, GoI) sanctioned this scheme for non-windy states/UTs to fulfill their non-solar RPO obligation on 14th June 2016.

First bidding was successfully done by Solar Energy Corporation of India (SECI) with achieving the lowest tariff of Rs.3.46/unit by the reverse bidding process. The next ISTS bidding is opened for setting up of 1000 MW wind power project (again through SECI). SECI is the nodal agency of this project.

SECI is trying innovative approaches to keep the sector sustainable and diversified. It is recently focussed on giving the advantages to Central Public Sector Enterprises (CPSEs).

ists

Other major points which are focused in this scheme are as follows:-

  • To encourage competitiveness through scaling up of project sizes and an introduction of efficient and transparent e-bidding and e-auctioning processes.
  • Fulfillment of Non-Solar Renewable Purchase Obligation (RPO) requirement of non-windy states.
  • E-reverse Auction.
  • Eligible Bid capacity min. 50MW and max. 250MW
  • Upper ceiling tariff of Rs 4 per unit.
  • Quick response (not more than 1 month) for RFS (Request for selection). After publishing of the guideline.
  • SECI will sign PPA with selected bidders and CPSEs and also back to back PSA with buyers at a pooled price of total capacity allotted for 25 years from the date of commercial operation.
  • SECI will take trading margin as mutually agreed buyers or as per CERC’s long-term power purchase norms which are lower.
  • No separate financial assistance is given to any bidders for implementation of this schemes.

Use of pooling substation

  • Pooling substation or pooling point where multiple wind power project may connect to a common transmission line.
  • From here a common transmission line shall be constructed and maintained by the developers to get connected with ISTS substation.
  • Pooling substation may be 33 kV and above.

Technical Criteria

ISTS 2

Financial approaches

  • Minimum net worth of bidder is Rs. 1.50crore/MW.
  • Earnest money Deposit (EMD) of Rs 10lakh/MW in the form of bank guarantee along with RFS.
  • Performance bank guarantee (PBG) of Rs.20lakh/MW within 30daysfrom date of issue of Letter of an award.
  • Bank guarantee against EMD shall be returned to the selected bidders after submitting the PBGs verified by SECI.
  • If the bidder is not able to the PPA within the time limit, the bank guarantee equivalent to EMD shall be encashed by SECI as the penalty.
  • If the project is not selected, SECI shall release the bank guarantee within 15days of Letter of allocation (LoA).
  • PBGs valid for 18month from the date of issue of LoA.
  • PBG will be returned to developer/bidder after successful commissioning.
  • WPD shall tie up for financing arrangements for the projects within 9 months from the issuing date of LoA.
  • Delay in achieving previous parameters a penalty Rs 10000/- day per MW is given to SECI which will be used for development of wind energy sector.

Conclusion

The recent GoI focus on CPSEs can help in increasing the installation capacity of wind energy with very low cost. This will intensify the market competition resulting in further fall in tariff. It will also help discoms for an assured (no counterparty risk from SECI) and cheaper offtake from renewable energy. This will improve their financial health. So, a win-win situation for the consumers and discoms is expected. It may pose a tough scenario for the developers but an increase in the technological efficiency may compensate it in coming times.

It is an enabling factor for achieving 60 GW of the wind by 2022.

Again all developers are planning again to go beyond this tariff. So achieving of 60gw wind power energy by 2022 will be successful if repeatedly competitive bidding is done.

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