Solar power producers need not worry over financial losses due to errant distribution entities. The Power Ministry’s latest guidelines on tariff-based competitive bidding and the process for procurement of power from grid-connected solar power projects have come to their rescue.

According to the guidelines, the government will compensate solar power producers for grid unavailability, back down, and transmission constraints, if any. This has been a long standing demand of the industry.

The new guidelines also allowthe procurers to acquire project assets for 90 per cent of the due debt in case of a loan default by the solar power generators. The guidelines allow lenders to exercise their mortgage rights and liquidate the project assets.

The guidelines emulate the norms defined by the 750-MW solar projects in Rewa, Madhya Pradesh that was bid out in February. Similar to the Rewa project, the Ministry of Power has mandated a Payment Security Fund, which shall be suitable to support payment of at least three months’ billing of all the bid out projects.

This will be just one of the three mesh payment security mechanism instituted to cushion solar power producers. But, the onus of compensating power producers still lies with the state governments.

In the event of grid unavailability, power producers will be compensated annually for the total generation loss from 8 am to 6 pm in a day. The new guidelines have also instituted the monthly minimum generation compensation due to back downs during a monthly billing cycle.

Under the new guidelines, the government has institutionalised tariff-based competitive bids for solar power.

States will have the option of calling for bids to lower tariffs or to lower the support from the viability gap fund as the bidding parameter.

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