MNRE-Projects_smallThe Ministry of New and Renewable Energy has finalised modalities for setting up grid-connected solar photovoltaic power projects of 15,000 MW aggregate capacity during the period 2014-15 to 2018-19 through a scheme under the National Solar Mission.

Under the scheme, the projects will be developed in three tranches of 3,000 MW, 5,000 MW and 7,000 MW by both private and public sector developers through NTPC and NTPC Vidyut Vyapar Nigam Ltd.

The first tranche, which is Batch II of the second phase of NSM, covers the period 2014-15 to 2016-17. In this tranche, 3,000 MW solar power will be bundled with 1,500 MW unallocated thermal power in the ratio of 2:1. The Ministry of Power has already ensured availability of the unallocated thermal power. The bundled power will be made available to states that provide land for setting up the solar power projects, ensure connectivity to the projects and purchase a major portion of the bundled solar power for consumption within state. Based on the capacity allotted to each state, developers are going to set up the projects. The selection of developers will be through an international competitive bidding process conducted by NTPC and NVVNL.

Out of the 3,000 MW capacity earmarked for the first tranche, projects of 1,000 MW capacity have been set aside for setting up on land in Andhra Pradesh. The balance 2,000 MW under the bundling scheme will be allotted to other states that come forward.

MNRE has determined a model for developing the solar power projects in the first tranche. As per the model, the eligible plant capacities need to be minimum 10 MW. The maximum capacity will vary from state to state depending on factors such as total size of projects allotted to each state and availability of land. NTPC and NVVNL will frame guidelines for conducting state specific e-bidding based on fixed levelised tariffs. The developers have to submit bids quoting a fixed levelised tariff and commit to sell power from their plants to NTPC and NVVNL at the quoted tariff over the entire project duration of 25 years.

The selection of bids will be done based on lowest quoted levelised tariffs. The tariff bid cannot be higher than the applicable tariff as fixed by the concerned State Electricity Regulatory Commission/Central Electricity Regulatory Commission. The tariff agreed upon cannot be changed by the SERC during the project duration period. NTPC/NVVN will sell the bundled power to willing state power utilities under a 25-year Power Sale Agreement at weighted average tariff of the solar and thermal components plus proposed trading margin of Rs.0.07/kWh. The developers can reconfigure and repower their plants during the duration of the power purchase agreement but NTPC and NVVNL will be obliged to buy power only within the capacity utilisation factor range laid down in the PPA. Any excess power generated will be purchased at a notional support price of only Rs.3/KWh. The developer, however, can sell the excess power in the open market.

Based on the experience gained during implementation in the first tranche, MNRE will devise suitable mechanisms for setting up solar power projects of 12,000 MW capacity under the second and third tranches with minimum government support. Projects under the second tranche are scheduled for implementation during the period 2015-16 to 2017-18. The third tranche covers the period 2016-17 to 2018-19. Out of the total capacity envisaged under the scheme, a portion will be earmarked under the Domestic Content Requirement provision for ensuring utilisation of domestically manufactured solar cells and modules.

To ensure bankability of the PPAs signed between developers and NTPC and NVVNL and also ensure timely payment to developers, MNRE has announced the setting up of a working capital fund with an estimated corpus of Rs.2,300 crore. The fund will cover three months payment for the 4,500 MW bundled capacity (3,000 MW solar power with 1,500 MW NTPC coal power) in the first tranche.

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