Viability Gap Funding Explained

Viability Gap Funding (VGF) was announced in 2004 to support the PPPs (Public Private Partnership) in infrastructure projects as they require high upfront investments and have a long gestation period, offer fixed returns etc. This financial support is provided in the form of capital grants, one time or deferred at the stage of construction to make such socially viable projects commercially viable. MNRE has proposed norms for VGF as a mode of funding for grid connected solar projects during Phase II of JNNSM. The cumulative target for Phase II of JNNSM (2013-17) is installation of around 10,000 MW utility scale solar power projects. As per the guidelines of the policy document (draft), the process of reverse bidding would be carried out where the bidders would bid for the funding requirement in Rs/MW to make their projects commercially viable.  The advantage of this scheme is that with upfront availability of part of capital, cost of financing would be lower. However on the down side this could result in the long term …

REC trading in April’13

After the much eventful trading in March, REC trading this month dropped on the Non-Solar front. This isn’t much of a shock as this was expected for the first month of financial year. However, the drop was so huge that Non-Solar trading in April is the lowest in 23 months. On the Solar front too, there was drop in trading volume but not as notable. Clearing Price wise, however, Rs.12093/REC was the lowest Average Clearing Price for Solar RECs since the beginning of trading in May last year. The table below summarizes the trading for April on each of the power exchanges – IEX and PXIL.   Here are a few numbers and graphs with respect to Solar and Non-Solar REC trading in April.   Non-Solar REC trading: As is the trend, all the Buy Bids (44459) were cleared resulting in a Trading Value of Rs.6.67 Crores. Clearing Price stood at the usual Rs.1500 owing to oversupply. The graph below shows the trends in Buy Bids, Sell Bids, Traded Volume …

AP Govt. fixes Solar bidding benchmark tariff at Rs.6.49/unit

In what can be called a disappointing update, Andhra Pradesh Government has announced that the Benchmark Price for the recently concluded Solar Bidding would be Rs.6.49/unit. While some of you reading this might immediately be tricked into thinking that this is more or less the same as that of Tamil Nadu’s Benchmark Price, please be informed that AP Solar bidding does not have year-on-year tariff escalation. This means that the tariff would be a flat rate of Rs.6.49/unit for the duration of the PPA i.e. 20 years. Though there is no official announcement yet made by APTRANSCO, this information is based on the announcement made by the Govt. further to today’s GoM meeting. It is a well known fact that Rs.6.49/unit is the State-wide lowest bid submitted by Sunborne Energy. While it might have been pretty easy for the govt. to decide on the Benchmark Price as the lowest tariff bid received, the tariff is simply not workable for smaller projects planned to be setup by first time entrants into …

AP’s first REC based Solar PV project accredited

Almost 7 months after the AP Solar Policy was announced, Andhra Pradesh finally has a Solar PV project accredited under the REC mechanism. Accredited on 8th April, 2013, the 5.75 MW by KCP Limited is the first REC based Solar PV project to be accredited in Andhra Pradesh. Until now, Rajasthan, Maharashtra and Madhya Pradesh have been the major contributors to REC based Solar PV  projects in India contributing to 89% of total accredited capacity of 109.505 MW. Odisha, Chattisgarh and Tamil Nadu and contribute to the remaining capacity with each having 1 or 2 projects Accredited. The following table shows state-wise Solar PV accredited capacity: (State wise % Solar PV capacity accredited under REC mechanism) While there was much ambiguity in the minds of a lot of Solar Power Developers in terms of the procedural delays for REC accreditation in Andhra Pradesh, this first project would set the precedent and pave the way forward for more and more projects to be accredited in the state under REC scheme. The list …

Karnataka releases RfP for 130 MW of Solar Thermal/PV

The Karnataka Renewable Energy Development Ltd (KREDL) has announced an Request for Proposal (RfP)to undertake the development of Solar Thermal or Solar PV projects in the State of Karnataka. This second phase has an aggregate capacity of 130 MW (solar thermal and PV combined). This blog covers the salient features of this RfP document.   Project Capacity: Minimum capacity of a project should be 3MW where as the maximum 10 MW. A bidder can propose any number of projects. But the total aggregate capacity allowed for any bidder including its group business entities bidding as single business entity or as a consortium is 10 MW. And the bidder will need to submit separate discount tariff for separate projects. The RfP gives the flexibility to change the location during the RfP stage, if the land proposed could not be acquired. But the discount tariff will not be changed under any circumstances. Minimum Project Capacity Maximum Project Capacity Maximum capacity by single bidder 3 MW 10 MW 10MW  There is also facility …

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