Wind turbines stand at a farm. (Photographer: Tomohiro Ohsumi/Bloomberg News)

Payment Security, Compensation For Wind Power Producers Under New Guidelines

Wind power producers will get payment security and compensation for forced cuts in output under the new guidelines issued by the government for procuring wind power through competitive bidding.

The guidelines issued today standardise the process and define the roles and responsibilities of stakeholders. They aim to ensure transparency in procurement and provide a framework for an intermediary for the sale or purchase of long-term power, according to a notification issued by the government.

The payment security in the new bidding guidelines didn’t exist in the power purchase agreements signed by the state distribution utilities with wind power developers in the past, said Sabyasachi Majumdar, senior vice president and group head at ICRA Ratings. This along with measures on compensation for grid curtailment and termination of payments, if implemented, is favourable for developers, he said.

Other key guidelines include standardisation of bidding process and a risk-sharing framework to tackle changes in law, force majeure, and a default by a procurer or a generator.

They come after the Indian Wind Energy Association moved courts against Gujarat and Tamil Nadu for inviting bids in the absence of central government’s guidelines. It may withdraw petitions after the guidelines are issued, an official of the Ministry of New and Renewable Energy had told BloombergQuint.