CEA issues guidelines for tariff bidding in WTE projects

The Central Electricity Authority has issued guidelines under Section 63 of the Electricity Act, 2003 for tariff-based competitive bidding to procure power from grid-connected Waste to Energy projects. The guidelines set out a uniform process for procurement and seek to support new plants that use municipal solid waste as fuel.

The guidelines apply to new WTE projects based on commercially proven technologies. They assign clear roles to the implementing agency, the WTE developer, and the procurer. The implementing agency, usually an Urban Local Body or a state-nominated entity, is responsible for planning the project, securing land and approvals, preparing bid documents, and running the bidding process. It must ensure the supply of a minimum quantity of segregated waste.

The WTE developer, selected through competitive bidding, will build, own, and operate the plant. The developer must secure permits, meet construction deadlines, and run the facility in line with contractual and statutory requirements, including the Solid Waste Management Rules 2016. The procurer, usually a distribution licensee, will sign the Power Purchase Agreement, enable power evacuation, and put in place payment security. An intermediary procurer may be appointed to aggregate power from multiple projects.

The bidding process will use a single stage with two envelopes for technical and financial evaluation through an electronic platform. The tariff will be based on either a levellised rate in INR per kWh or the Viability Gap Funding needed to supply power at a pre-specified tariff. Bidders need to meet technical and financial criteria and must have a net worth of at least 30 percent of the estimated project cost. The timeline provides at least 45 days between the release of the Request for Selection and bid submission. The full process from RfS to financial closure is expected to conclude within 180 days.

The framework requires a PPA term of at least 20 years, aligned with the Concession Agreement. Procurers must maintain payment security under the Electricity Late Payment Surcharge and Related Matters Rules 2022. All available power from the project will be treated as must-run. Liquidated damages apply for delays in the Scheduled Commencement of Supply Date, with termination allowed if delays exceed six months. Change in Law events will follow the Electricity Timely Recovery of Costs due to Change in Law Rules 2021.

The implementing agency must prepare a pre-feasibility report covering waste assessment, site selection, and financial analysis. The Concession Agreement will set terms for tipping fees, VGF disbursement, and penalties. The WTE developer will arrange transmission connectivity and bear associated costs up to the metering point. The guidelines allow the use of Bank Guarantees, Letters of Undertaking from IREDA, PFC, or REC, or Insurance Surety Bonds for EMD and PBG. Any deviation from the guidelines will need approval from the Appropriate Commission before the bidding process begins.