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Amendment to competitive bidding process provide relief to solar energy developers

A recent amendment by MNRE to its guidelines for the competitive bidding process will provide relief to solar energy developers by tackling issues such as payment security mechanism, curtailment of power, land acquisition, timely tariff adoption among others. This amendment supports payment security mechanism where intermediary procurer can collect ?500,000 ($7,000)/MW from the solar power developers, and the amount would go to the payment security fund and also an additional risk premium of ?0.10 ($0.0014)/kWh will be paid by the end procurer to the intermediary procurer which shall be supplemented by state government’s guarantee covering the security for the payment of energy charges through a tripartite agreement will be signed between the Reserve Bank of India (RBI), the central government, and the state government. Land acquisition is a major challenge for solar energy projects and amendment has allowed an extra 10 or 11 month to submit the proof of land acquisition at the time of financial closure, this is expected to provide some degree of relief. Also the tariff will be calculated by using a weighted average tariff of bids for January 1 to June 30 and July 1 to December 31 of any year. These amendments from time to time seems to be a good effort to expedite the entire process of solar project development, right from tendering and auctioning to commissioning.