The Indian government has made significant changes to the conditions of wind energy auctions to attract project developers back to the large-scale tenders.
The last two wind energy tenders in India have been significantly undersubscribed and the government was quick to make some small but crucial changes to the conditions of wind energy tenders issued by the Solar Energy Corporation of India. Some of the issues addressed by the government include those related to land acquisition, penalty on the shortfall in the generation, payment for generation in case of early commissioning, and timeline to fully commission projects.
Earlier, the project developers had a total of seven months from the date of signing the power purchase agreement to acquire all the land necessary to commission the project. However, through the latest amendment, this time limit has been completely removed. Now the developer can acquire land up to the date of scheduled commissioning which would be at least 18 months after signing the power purchase agreement or the power supply agreement (explained later).
Penalty on Shortfall in Generation
As per the original regulations any shortfall in generation corresponding to the declared capacity utilization would attract a penalty for the project developer. This penalty was to be levied at the rate of 75% of the tariff rate. This penalty has now been reduced to 50% of the tariff rate. Further, according to the original rules, a higher shortfall in generation could have allowed the authorities to levy a higher penalty; this clause has been fully withdrawn in the amendments. Finally, the new change in regulations also allow this penalty to be deposited with the end-consumer (distribution utilities), a provision that was absent in the original regulations.
Payment on Early Commissioning
The project developers shall now receive payment as per the full tariff rate in case they commission their projects before the scheduled date. As per the original regulations, developers would have received payment at the rate of 75% of the tariff rate.
Timeline to Commission Projects
Project developers earlier had 18 months to commission their projects from the date of signing the power purchase agreement with the tendering agency (most commonly the Solar Energy Corporation of India). SECI, in turn, also signs a power supply agreement with interested distribution utilities interested in buying energy generated from wind energy projects. With the new amendment, project developers shall now have 18 months to commission the projects from the date of execution of the power purchase agreement or the power supply agreement, whichever is later.
The last auction held by SECI in May this year saw an unexpectedly poor response from developers. Against an offered capacity of 1.2 gigawatts, developers submitted bids only for 600 megawatts. Finally, only 480 megawatts of capacity was allocated to developers. These changes may help the government bring back developers to the auctions.