Ministry of New and Renewable Energy (MNRE) on 18th April, 2013 released draft guidelines for setting up of 750 MW Grid Solar PV plants through Viability Gap Funding (VGF) route under JNNSM Phase- II, Batch- I. As per these guidelines, reverse bidding for projects shall be carried out on the basis of the amount of money required to make the project commercially viable and accordingly projects shall be selected.
Mechanism of operation of VGF:
- Fixed tariff at Rs.5.45 per kWh for 25 years project period for projects not availing Accelerated Depreciation (AD) benefits and Rs. 4.95 per kWh for projects availing AD benefits
- Upper limit of VGF is 30% of the project cost or Rs. 2.5 Cr./MW, whichever is lower
- Equity contribution of at least Rs. 1.5 Cr./MW
- Disbursement of VGF amount is done in three stages
- 25% at the time of delivery of at least 50% of the major equipment (modules, mounting structures, power conditioning units, switchgears and transformers) at the site after inspection by a committee to be constituted by MNRE
- 50% after successful commissioning of the full capacity of the plant
- 25% after one year of successful operation
Total capacity of grid connected Solar PV Technology projects: 750 MW
- The solar power projects are required to be designed for inter-connection with transmission network of STU/CTU at voltage level of 33kV or above.
- Minimum capacity of each project: 10 MW
- Maximum capacity of each project: 50 MW
- Plant capacity to be allocated in multiples of 10 MW
- Maximum aggregate capacity per company (including its Parent, Affiliate or Ultimate Parent- or any Group Company) is 100 MW with a maximum of three projects at different locations
Processing Fees (Non-refundable):
- Up to 20MW: Rs. 1 Lakh
- Above 20 MW: Rs. 2 Lakh
- Financial Criteria: Net Worth of the company should be equal to or greater than the value calculated at the rate of Rs. 2 Crore or equivalent US$ per MW of the project capacity upto 20 MW. For every MW additional capacity, beyond 20 MW, additional net worth of Rs. 1 Crore would need to be demonstrated.
- Technical Criteria: To minimize the technology risk and to achieve the commissioning of the projects, it is proposed to promote only commercially established and operational technologies.
- Clearances: Project developer has to obtain necessary clearances from the State Government and other local bodies
- Domestic Content Requirement (DCR): The solar cells and modules used in the power plant must both be made in India. Some of the total capacity will be kept for bidding with DCR
Power Purchase Agreement (PPA) is to be executed between SECI and the project developer along with invitation for submission of RfS. Simultaneously SECI shall issue letters to all State Utilities/ DISCOMs to invite ‘Expression of Interest’ from State Utilities/ DISCOMs willing to procure the power. Solar power would be purchased @Rs.5.50/ kWh (including Trading Margin of SECI @ 5 paisa/kWh) under VGF scheme.
- Earnest Money Deposit (EMD) of Rs. 10 Lakh/MW in the form of Bank Guarantee along with RfS
- Performance Bank Guarantee of Rs. 20 Lakh/MW at the time of signing of PPA
Part commissioning is accepted by SECI with a minimum capacity of 10 MW and in multiples thereof. PPA would come into force for a period of 25 years from the date of part commissioning.
Payment security mechanism: To ensure timely payment to the developers, SECI would set up this fund which will have a corpus to cover 3 months payment. The money received from encashment of Bank Guarantees, interest earned on this fund, incentives for early payment, extra money coming from 10% lower tariff to developers claiming AD and grants from Government/ NCEF will be used to build this fund.
Project implementation timeline
Some errors in the document:
- Section 2, Clause 2.9 mentions that “The Project Developers are required to sign PPA with State Utilities/Discoms in line with the Timeline given in the guidelines”. However according to Section 2, Clause 2.8 the Power Purchase Agreement is to be executed between SECI and the Project Developer
- Section 3, Clause 3.2 mentions “..successfully commission 500 MW Solar PV Projects under VGF scheme in batch-I Phase- II..” instead of 750 MW
The date for comments/suggestions on the draft guidelines was closed on 30th April, 2013 and the final document is awaited. The policy document inviting comments on draft guidelines for setting up of 750 MW grid connected solar PV projects with VGF under JNNSM Phase- II, Batch- I can be downloaded here