wind power gets policy tailwind
The central government has put in place detailed guidelines for wind power generators to plug loopholes in contracts, reduce disputes and help achieve its ambitious target of generating 60,000 mw of power from the renewable energy source.
“The wind power generator (WPG), in a bid to ensure timely commencement of power, will have to submit documents pertaining to land acquisition, no objection certificate and environment clearance, forest clearance and letter from the state and central transmission utilities confirming technical feasibility of connectivity,” according to the 20 page guideline issued by the union ministry of power for tariff based competitive bidding process for procurement of power from grid connected wind power projects.
Further, if the WPG supplies energy less than the energy corresponding to the minimum capacity utilisation factor (CUF), he will be liable to pay to the procurer, penalty for the shortfall in availability of energy, according to the norms.
The power purchase period will not be less than 25 years from the date of scheduled commissioning date (SCD) or from the date of full commissioning of the projects, whichever is earlier.
A Union power ministry official told DNA Money, “The objective is to provide a framework for procurement of wind power through a transparent process of bidding, including standardisation of the process and defining of roles and responsibilities of various stakeholders. These guidelines aim to enable the distribution licensees to procure wind power at competitive rates in a cost-effective manner. These guidelines are crucial especially when the Centre has set an ambitious target of achieving 175,000 mw of power capacity from renewable energy resources by 2022, and out of this 60,000 mw is to come from wind power.”
As per the guidelines, a WPG will be free to sell power more than maximum CUF specified to any other entity with the first right of refusal being with the procurers. In case the procurer purchases the excess generation, the same would be done at 75% of the power purchase agreement (PPA) tariff. Additionally, the WPG will be free to re-power their plants during the PPA duration. However, the procurer will be obliged to buy power only as per terms of PPA.
As far as payment security is concerned, the distribution licensee will provide through revolving letter of credit or through payment security fund, which will be suitable to support payment for at least three months’ billing. Furthermore, the procurer may also choose to provide state government guarantee.
In the case of lack of evacuation of power due to temporary transmission unavailability, the excess generation by the WPG equal to the generation loss will be procured by the procurer at the PPA tariff so as to offset the loss.
In case of breakdown of plant, the generation compensation will be limited to the extent of shortfall in annual generation corresponding to the maximum CUF and the same will be settled on annual basis. No trading margin will be applicable on the generation compensation.