MoP Pushes Insurance Surety Bonds as Alternative to Bank Guarantees Across Power Procurement
The Ministry of Power has directed states and utilities to accept Insurance Surety Bonds as an alternative to bank guarantees for bid and performance security across power procurement and BESS tenders.
April 08, 2026. By Mrinmoy Dey
MoP has already incorporated provisions for ISBs in the Standard Bidding Guidelines for Renewable Energy projects (Solar, Wind, Hybrid, FDRE), Pumped Storage Projects, and Transmission projects, through an amendment to the General Financial Rules (GFR), 2017 in 2022.
The ministry highlighted that ISBs offer financial security equivalent to bank guarantees while significantly reducing developers’ credit exposure and easing liquidity constraints. This is expected to be particularly beneficial for capital-intensive segments like renewable energy and battery energy storage systems (BESS), where upfront financial commitments often pose a barrier to entry.
Expanding the scope further, the MoP has advised that ISBs be accepted across all power procurement frameworks – covering long-term, medium-term, and short-term tenders, as well as emerging segments such as BESS. “This will ensure policy consistency across segments, improve ease of doing business, and facilitate wider and more competitive participation in the power sector,” the Ministry stated.
Under the amended GFR provisions, both bid security and performance security can now be furnished through ISBs, placing them on equal footing with bank guarantees and other accepted instruments.
The policy intervention comes at a time when India is scaling up renewable energy deployment and storage capacity, with financing flexibility emerging as a key enabler for faster project execution and broader market participation.
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