MNRE amends the land allotment clause in the solar park projects guidelines

Ministry of New and Renewable Energy (MNRE) recently announced amendments in two guidelines for setting up a grid-connected solar PV power projects for 2000 MW and 5000 MW along with Viability Gap Funding (VGF) for Batch III & Batch IV, Phase II NSM respectively. The amendments are as below:

Guidelines for setting up a grid-connected solar PV power projects for 2000 MW along with Viability Gap Funding (VGF) for Batch III  Phase II NSM

Guidelines for setting up a grid-connected solar PV power projects for 5000 MW along with Viability Gap Funding (VGF) for Batch IV  Phase II NSM

The amendments are assumed to have come into existence due to the slow interest in the tenders due to lack of land allotments and the financial issues related to it. Currently, around 7% of the total installed capacity is from solar. But lately, the solar installations have taken a back seat due to issues like anti-dumping tariffs, and confusion in the GST rate.

INR 2.67/unit tariff discovered for hybrid wind-solar 1.2 GW tender

The maiden tender for ISTS-connected hybrid wind-solar projects discovered an L1 tariff of INR 2.67/unit recently. The tender postponed six times in the past, due to lack of interest and the capacity was also reduced to 1.2 GW from 1.5 GW previously. The recent tender attracted two bidders who successfully bid for the hybrid projects:

These were the only two firms to participate in the Solar Energy Corporation of India’s (SECI) tender for 1,200 MW of wind-solar hybrid units. The two companies had offered 1,050 MW capacity in total. Due to several issues surfacing in the first tender of its kind, the last date for bid submission had been postponed six times.

The tender saw such a low response due to the low ceiling tariff for the tender. Initially, the ceiling tariff was fixed at INR 2.90/unit but was later reduced to INR 2.60/unit post directions from Ministry of New and Renewable Energy (MNRE). Currently, the market derived tariff for solar found in India is `2.42/unit and for wind energy, the lowest price discovered is Rs 2.43/unit.

The hybrid policy was launched in May,  with an objective to provide a framework for promoting large grid-connected wind and solar PV hybrid system for efficient utilization of transmission infrastructure and land. Along with this, it aims to help reduce the inconsistency in the renewable power generation and in turn achieve better grid stability.

MNRE to Implement scheme: 1 GW solar Projects by PSU’s and GOI Organizations

Ministry of New and Renewable Energy (MNRE) in its latest notification on 18th Jan 2014, has given guidelines for the implementation of a scheme for the development of 1000 MW of grid connected Solar Power Projects by Central PSU’s and Govt. of India organizations and various central and state schemes with Viability Gap Funding under batch-V Phase-II of JNNSM in a span of 3 years. The Central Financial Incentive (CFA) required is estimated to be 1000 crores.

Solar Energy Corporation of India (SECI) will handle the scheme on behalf of MNRE. SECI will be given a fee of 1% of the VGF disbursed for handling the funds and managing the Scheme.

The Ministry is promoting domestically manufactured solar cells and modules, knowing that the domestic manufacturing capacity is facing tough competition from the foreign players like china and US, which are selling the cells and modules at significantly lower price. The Indian manufacturing capacity is also not enough to meet the demand, which has been a concern for the govt. that resulted in dropping the anti-dumping duties proposed by director general of Anti-dumping.

The Govt. has now taken new steps to promote the domestic manufacturing by giving specific project capacities under certain schemes.

The Scheme Document can be accessed here.

MNRE Releases Draft Guidelines for Development of 3 GW Solar Projects under Batch-II Tranche-I

Ministry of New and Renewable Energy (MNRE) on 14th January 2015, has released draft guidelines for the development of 3000 MW of solar projects under JNNSM batch-II phase-II will be implemented by NVVN on Solar Parks to be developed through association of Central and State Agencies, and through open competitive Bidding.

Minimum Projects size will be 10 MW, and the power generated will be bundled with the thermal power and at fixed levellized tariff for 25 years. The tariff will be fixed through bidding process. The bidders will be free to avail fiscal incentives like Accelerated Depreciation, Concessional Customs and Excise Duties, Tax Holidays, etc. NVVN will bundle the Solar Power with unallocated Thermal Power from Coal based stations of NTPC on 2:1 basis (2 MW of Solar with 1 MW of Thermal), and sell the Bundled Power to willing State Utilities at Weighted Average Tariff of the Solar and Thermal components plus Trading Margin of Paisa Seven (7) per kWh. Discoms can fulfill RPO requirement on purchase of this power.

It will be duty of the implementation agency to provide land and connectivity required if the project is in a solar park under MNRE guidelines. The Guidelines clearly says that Under Domestic Content Requirement, the solar cells and modules used in the solar PV power plants must both be made in India.

Previously in October 2014, MNRE had laid guidelines for the development of 1000 MW solar projects in the Andhra Pradesh.

The draft can be accessed here.

Previous post on the MNRE guidelines can be read here.

MNRE Releases Draft Guidelines for 3000 MW Solar Under JNNSM

Ministry of New and Renewable Energy (MNRE) has recently released the draft guidelines for selection of 3000 MW grid connected Solar PV Power Projects under Phase-II, Batch-II & tranche-I of JNNSM.

Under Part-I of Tranche-I, 1000 MW Solar PV Projects would come up in the Solar Park to be developed by the Joint Venture company of SECI, NEDCAP & APGENCO at Kurnool district in Andhra Pradesh.

The key points proposed in the draft are as below:

  1. The Scheme will be implemented by NVVN.
  2. The selection of Grid Connected Solar PV Projects of 1000 MW will be carried out by NVVN through a transparent tariff based bidding process.
  3. The generated power from developer will be purchased by NVVN and sold to AP distribution companies.
  4. To connect the projects to the transmission utility substations at 132kV and above, the Project capacity should be 50 MW.
  5. The maximum capacity to be allocated to a company or its group companies should be limited to a total of 250 MW.
  6. Out of total 1000 MW Under this scheme a capacity of 250 MW will come under Domestic Content Requirement (DCR).
  7. Keeping the slow-moving REC market in mind, it has been proposed that the NVVN will purchase 1 (One) Non- Solar REC (or proportionate Solar REC so as to match expenditure on non-Solar REC) for every 40,000 Units of bundled power purchased. The power sold to DISCOMs will cost them an extra Rs. 0.05/Unit, which is quite insignificant.
  8. The 1000 MW purchased by NVVN, will be bundled with 500 MW thermal power from NTPC.

 Time Schedule for Solar PV Projects:  Selection of Solar PV Projects shall be carried out according to the timeline given below:

The total bundled power of 1500 MW purchased, will result in injection of approximately 2250-2300 million units. As a result, NVVN will buy 56000-57500 REC per annum, which is insignificant compared to current inventory of 10.5 million RECs.

The relevant order can be accessed here.

Our previous Blog on MNRE JNNSM Phase-2 Batch-2 Scheme can be read here.

Contributed by Dheeraj Babariya.

REConnect Newsletter Volume 43 – OPEN ACCESS

Dear Reader,

We are pleased to present Open Access Vol 43 – our monthly newsletter covering RECs and regulatory and market developments in the renewable energy space.

The main article covers:

The government announced the re-introduction of Accelerated Deprecaition for wind projects. This was a major announcement for the Renewable energy industry. Our main article provides a detailed analysis of the impact of this change, and the relative merits and de-merits of investing in wind or solar projects.

This issue also covers:

– Details of the next batch of bidding for solar projects announced in JNNSM

– Details of the FOR meeting that took up the need for strong RPO enforcement

– Various other regulatory developments in Maharashtra, Rajasthan, Chattisgarh, Karnataka, and other states

Past newsletters can be accessed here –

For latest news and updates, please visit our blog at –

 As always, we will love to hear your feedback on the newsletter.

– Team REConnect

Reinstatement of Accelerated Depreciation benefit for wind and its impact on the Renewable Energy Industry

Earlier last month, when the Union Budget was presented, there was a mention of reinstatement of Accelerated Depreciation ( AD ) for Wind Energy generators, in the Hindi version of the budget, whereas it found no mention in the English version. This caused confusion in the RE industry circles. However, the government clarified that AD has indeed been brought back on wind investments.

Wind Power development in India started in the early 90s. As per Section 80(J) of Income Tax Act 1961, industries were allowed 80% depreciation on capital invested. Since then till 2012 (when the benefit was removed), Wind Power development and growth has always relied primarily on Accelerated Depreciation (AD).

New wind capacity additional peaked in 2011-12 at about 3,200 MW, falling sharply to 1,700 MW the next year as AD benefits were removed. The argument put forward at that time by policy makers was that wind industry had matured, and the focus needed to shift to solar. This fits well with the objectives of the National Solar Mission.

The decline in wind investment due to withdrawal of AD coincided with healthy growth of close to 60% in Solar Power in 2012-13 and 2013-14. The market momentum had definitely shifted in favor of Solar. Our analysis suggests that Wind AD market had an investing capital of close to 7300 crores. This shifted to Solar AD market which saw increase in investments worth Rs 7500 crores during 2012-13.

The new government has announced that it was reintroducing AD (80%) in 2014, much to the delight of Wind Power stakeholders. We believe that the investment momentum will shift again to wind due to more mature policies and attractive tariffs.

Wind tariff in recent years have become very attractive and are close to solar tariff in many states. In Rajasthan, Maharashtra and MP, tariff in the range of Rs. 5, whereas solar tariffs are generally in the range of Rs. 6, leaving a very small gap.

With this, there will certainly be a diversion in investments from Solar to Wind power in the times to come.

These can also be understood from the table and graph below.

The green dots represent the advantage to the sector.


MNRE issues Draft Guidelines for JNNSM Phase-2 Batch-2 Scheme

MNRE (Ministry of New and Renewable Energy), has officially issued Draft Guidelines for selection of 1500 MW Grid Solar PV power projects under National Solar Mission, Phase-II Batch-II Scheme.

Here are some key points of the proposed scheme:

  • It is to be carried out by NVVN (NTPC Vidyut Vyapar Nigam Limited) through a transparent, tariff based reverse bidding process.
  • NVVN shall enter into suitable Power Purchase Agreement (PPA) with Solar Power Developers and Power Sale Agreement (PSA) with Distribution Companies/ Utilities/ other Bulk Consumers.
  • There will be two bid tranche: 750 MW in 2014-15, and remaining 750 MW in 2015-16.
  • Projects with minimum capacity of 10 MW and maximum capacity of 50 MW, and connection level with transmission utilities at 33kV and above, shall be permitted to bid.
  • A company can only bid for a maximum capacity of 100 MW per tranche.
  • DCR to be 500 MW out of the total 1500 MW. It was 50 % (375 MW) in Phase-II Batch-I scheme.

Interested stakeholders are required to send their comments by 23rd July, 2014.

It is interesting to note that out of the target capacity of 9000 MW in Phase 2 (2013-2017), 750 MW bids have been successfully completed, and as per this scheme 1500 MW bids will be completed by 2015-16. That leaves just 2 years i.e. 2016-17 and 2017-18 for the remaining 6750 MW of bid capacity.

Target achievement will be difficult but not impossible, considering that by 2017 India aims to achieve Grid Parity with respect to Solar Power, by extending the incentives (concessional customs duty) given to the Solar manufacturing sector and inflow of funds from NCEF.

The draft document can be accessed here.

Our previous Blog on JNNSM Phase-II Batch-I can be accessed here.

India to Launch Bidding for 1500 MW of Solar Power Projects under JNNSM

India under its JNNSM (Jawaharlal Nehru National Solar Mission) is about to launch bidding for 1500 MW of solar power projects.

The bidding will come under the JNNSM Phase 2 Batch 2, which aims to achieve 10 GW of solar power by 2017, and as a part of this phase the government has already tendered 750 MW of solar power projects earlier in January this year, and plans to have a total of 20 GW of solar power capacity by 2022. The solar power produced under this phase would be bundled with the conventional power and will be sold to distribution licensees at an average rate of power purchase (APPC).

The selling and bundling of power would be handled by NVVN (NTPC Vidyut Vyapar Nigam), a subsidiary of India’s power giant NTPC. According to NVVN officials the cost of bundled power would be around Rs. 4-4.5 per unit.

The development is confirmed by Mr Tarun Kapoor Joint Secretary MNRE saying that – “We are in consultation with all the stakeholders and would come out with bidding guidelines soon, most likely the bidding would commence by July-August”.

Mr. Piyush Goyal (Hon’ble Minister of Power, Coal and New & Renewable Energy in the Government of India.) had given an indication earlier about setting up higher targets and advancing the timeline of the Solar Mission. “With both power and renewable energy under the same minister, it was easy to co-ordinate with the power department to allocate conventional power for bundling solar power“, said a senior official at the (MNRE).

The last batch of bidding under JNNSM had fixed the tariff at Rs. 5.45 per unit supported with viability gap funding. A senior MNRE official said that “it was effort of NVVN that the cost of solar power came down by Rs. 8-10 per unit from Rs. 17 per unit in 2011 “, also added that the ministry is hopeful of achieving grid parity by 2017.

You can access our earlier blog post on the results of JNNSM Phase 2 Batch 1 here.

Recent media article can be accessed – Economic Times

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