MNRE clarifies on opening and maintaining of letter of credit as payment security mechanism

Aug 05, 2019 | by Avantis RegTech Legal Research Team

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The Ministry of New and Renewable Energy (MNRE) on July 31, 2019, gives clarification regarding opening and maintaining of letter of credit (LC) as payment security mechanism under power purchase agreements by distribution licensees. 

It has been clarified that the fixed charge in the solar, wind and small hydro power will be the tariff on which the power is being purchased by the Distribution licensee as it reflects the cost of installation, operation and maintenance of the power plant. The energy generated during the non-dispatch period shall be calculated on the basis of capacity utilization factor as declared by the generators in Power Purchase Agreements (PPAs), and for projects having more than one year operation, the power not-dispatched shall be calculated on the basis of pro-rated actual energy generated in the last twelve months.

 


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