The Ministry of New and Renewable Energy recently released the final guidelines for implementation of its scheme for setting up 750 MW grid-connected solar power projects under batch I of the second phase of the Jawaharlal Nehru National Solar Mission with Viability Gap Funding support from the National Clean Energy Fund through the Solar Energy Corporation of India in close association with the NTPC Vidyut Vyapar Nigam Limited.

The JNNSM  has set a target for deployment of grid-connected solar power capacity of 20,000 MW by 2022, to be achieved in three phases.

The first phase, up to 2012-13, promoted scale-up in grid-connected solar power capacity addition of 1,000 MW through the scheme of bundling with thermal power. It was implemented through NVVNL to minimize the financial burden on the government and a small component of 100 MW with generation-based incentive support through the Indian Renewable Energy Development Agency Limited.

In the first phase of JNNSM, solar power projects totaling 950 MW (excluding 84 MW selected under migration scheme) were selected in two batches (batch-I during 2010-11 and batch-II during 2011-12) through a process of reverse bidding. The resulting tariffs in Batch-I for

Solar Photo Voltaic projects ranged between Rs.10.95 and Rs.12.76 per unit, with average of Rs.12.12 per unit. In case of solar thermal projects, the tariff ranged between Rs.10.49 and Rs.12.24 per unit, with average tariff being Rs.11.48 per unit. In Batch-II, the tariff for SPV projects ranged between Rs.7.49 and Rs.9.44 per unit, with average tariff being Rs.8.77 per unit. The power from the plants is being purchased by the NVVNL and sold to distribution utilities/ Discoms after bundling with power from the unallocated quota of power from coal- based stations of NTPC on equal capacity basis, thus effectively reducing the average per unit cost of solar power. A total capacity of 420 MW has been commissioned under the two batches by the end of the first phase. In addition, a capacity of 50.5 MW under migration scheme, 88.8 MW under IREDA-GBI scheme and 21.5 MW under old demonstration scheme has been commissioned, taking the total capacity commissioned during the first phase to 580.8 MW.

The second phase, spanning the period from 2013 to 2017, envisages capacity addition of 3,000 MW. The third phase will run from 2017 to 2022.

To incentivize setting up of solar power projects and also minimize the impact of tariff on distribution companies, the first phase of JNNSM largely depended on the bundling scheme and to some extent on the GBI scheme. The VGF scheme has been selected for batch I of the second phase.

The final guidelines released by the MNRE mainly provides a policy framework and mechanism for selection and implementation of 750 MW grid-connected SPV power projects with VGF under batch I of the second phase of JNNSM. They have been laid down with the objectives of scaling up size of projects so as to lead to economies of scale of projects under JNNSM, facilitating speedier implementation of the solar power projects selected for meeting the target set for the second phase, enhancing the confidence of project developers, promoting manufacturing in the SPV sector in India, creating good business model and systems for various state governments and DISCOMs and facilitating fulfillment of Renewable Purchase Obligation.

Under the VGF scheme selected for batch I of the second phase of JNNSM, the tariff to be paid to the developer is fixed at Rs.5.45 per kWh. It will remain firm for 25 years project period. In case benefit of accelerated depreciation is availed for a project, the tariff will get reduced to Rs.4.75 per kWh. The developer will be provided a VGF based on his bid. The upper limit for VGF is 30 percent of the project cost or Rs.2.5 crore/MW, whichever is lower. The developer will be required to indicate his preliminary estimate of project cost. He is required to put his own equity of at least Rs.1.5 crore/MW. The remaining amount can be raised as loan from any source by the developer. The VGF when paid by the SECI may be used to return part of the loan or developer contribution (in excess of Rs.1.5 crore/MW) or a combination thereof as the case may be, in case investments have already been made. The VGF will be released in six tranches with 50 percent on successful commissioning of the full capacity of the project and the balance progressively over the next 5 years subject to the project meeting generation requirements.

Meanwhile, the SECI has issued the Request for Selection document for 750 MW grid-connected SPV projects under batch I of the second phase of JNNSM. The last date for submission of response to the RfS is December 28th, 2013.

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