What is India’s new RE based tender – Firm and Dispatch-able Renewable Energy (FDRE)?

Ajay Kumar Sinha, SECI

Regulatory Basics

Apr 03, 2024

As the momentum of renewable energy (RE) power has gained and tariffs have become competitive, means to use RE as a replacement for conventional energy is being thought about. However, the biggest challenge is intermittency, which comes with it. So far, it was easier to blend a very small portion of RE (primarily solar & wind-based energy) with a large amount of conventional energy. As the RE component is becoming higher in the energy mix (approx. 40 % in 2023 and expected to reach 65 % by 2030), the issues of intermittency, grid stability, RE as dispatchable power, etc., have become major issues requiring immediate resolution. Various solutions are being worked out at a breathtaking speed, supported by ever evolving and supporting policies.

One of the innovations that is being tried is ‘Round The Clock (RTC)’, which is supplied from RE sources with availability as high as 70% on a monthly basis. These tenders saw a huge success, and the tariffs were very lucrative to the buying entities. It prompted the Solar Energy Corporation of India (SECI) to come up with more innovations. One such innovation, namely RTC, was envisaged to optimise the diversity of our country. If we look at India’s geographical construct, its diversity poses a challenge but also offers opportunities, if harnessed well.

Diverse geography, combined with changing weather conditions, generates different combinations of energy requirements across the country in time and space. Winter, monsoon, summer, harvest seasons, etc., generate different load patterns for that region. Requirements are high for a fixed season and, at times, nil in another season. They are predictable, and the base load can be calculated with reasonable certainty. Therefore, if a generator’s energy is mapped in a manner that is optimally utilised amongst different regions, catering to their complementary load period, it can encourage generation optimisation and its utilisation. This also has the potential to address one of the most important concerns of the buying entities, which is dispatchability, when combined with storage solutions to offer round-the-clock supply. For this reason, it has been named as ‘Firm and Dispatchable RE (FDRE)’ or, in other words, Load Following: ‘They get what they want’ and not ‘use what is offered’, which shall signal a paradigm shift in the buyer-supplier relationship. However, one should be mindful while referring to ‘FDRE’ as many Peak Power/ RTC tenders are also getting referred to as ‘FDRE’. The case here is true FDRE, with prior consent and mapping of buying entities and their ‘Load Following’.

A guideline has already been issued by the Ministry of Power, Govt of India, on the FDRE, and tenders are being called accordingly. In these tenders, the developers are required to design RE plants to meet the demand profile of the buying entity, which is communicated beforehand through the tender document. The same is required to be met in such a way that at least 90% of the specified demand is met monthly. It is expected that the RE sector will see a sea of change with the success of these tenders and pave the way for more innovations in future.

Some of the salient features of the FDRE tender are enumerated below:

Salient features of RfS for 1500 MW Firm and Dispatchable RE (FDRE) to Punjab

  • Power supply on a “Demand-Following” basis: As required by the DISCOM, the RE Power Developer (RPD) must schedule power based on the pre-fixed demand schedule provided by the DISCOM.
  • Demand Fulfillment Ratio (DFR): The guidelines provide the bidding agency with the necessary flexibility to stipulate necessary performance criteria based on the requirements of the procurer. In line with this, as part of compliance with the above requirement of supplying power on a demand-following basis, the RPD shall be required to demonstrate a minimum “Demand Fulfillment Ratio” (DFR) of 90% on a monthly basis. The DFR will be calculated as: DFR = [Injection Scheduled by the RPD (MW) / Demand (MW) specified by the Buying Entity (MW) for the corresponding time block]
  • Shortfall in meeting the above performance criteria will result in levy of penalty on the RPD @1.5 times the PPA tariff, corresponding to the shortfall in energy to be supplied for the respective time block. Shortfall will be calculated based on monthly average of DFRs of each time block.
  • Bidding capacity limits: The minimum capacity to be quoted is 50 MW.
  • Project configuration: The RPD shall set up a single project against the contracted capacity awarded. The project may comprise any combination of Solar PV and Wind power components, which may be located at a single or multiple locations on a pan-India basis. Since the guidelines envisage the setting up projects with storage, Energy Storage Systems (ESS) will be mandatorily installed as part of the project. However, there’s no minimum or maximum rated capacity of ESS to be installed under the RfS.
  • Installed capacity: The “demand-following” requirements to be met by 100% RE power necessitates over sizing of the installed RE capacity by the RPD.
  • Milestones: As per the guidelines, the projects are required to commence the supply of power within 24 months from the effective date of PPA, which is known as the Schedule Commencement of Supply Date (SCSD). They are also required to demonstrate FC (Financial Closure) within the date as on six months prior to SCSD.
  • Already commissioned projects and projects which are in process of constructing and have untied capacity are allowed to participate in the bid.
  • Commencement of power supply: The grid code regulations, 2023, issued by the CERC, have also notified revised methodology of commissioning and declaration of COD of RE projects. Accordingly, SECI will not be responsible for the declaration of commissioning or COD of the projects under this tender. The commencement of the power supply will be accepted only upon the successful installation of the committed installed capacity and the submission of the COD certificate by the RPD.
  • Provisions related to early part/full commencement and part commencement of a single component have been suitably incorporated as per the Guidelines.
  • Sale of excess power: The Guidelines allows RPD to supply power in excess of the Contracted Capacity to any third party or power exchange without requiring any NOC from the Procurer. RPD is also allowed to sell power offered on day ahead basis to Procurer and not scheduled by the Procurer to any third party or in power exchange without requiring NOC from the Procurer. The same has been incorporated in tender document.

In the recent tendering round under FDRE-II, a capacity of 1.5 GW was envisaged to supply power to distribution companies in Punjab and Madhya Pradesh, of which post bids 480 MW of the same was auctioned as of March 2024. With complementary regulations and resource adequacy planning, FDRE can play a key role in how we integrate RE into the Indian Grids.

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