MNRE Draft guidelines for 2000 MW Solar projects Under VGF scheme

Ministry of New and Renewable Energy (MNRE) has notified the draft guidelines for the development of 2000MW of solar projects. The Solar Projects of 2000 MW Capacity under the State Specific VGF Scheme will be set up in the Solar Parks of various states, to be developed through coordinated efforts of Central and State Agencies.

This scheme envisages providing Viability Gap Funding through SECI to the bidders selected through a transparent bidding process to procure solar power at a pre-determined fixed tariff.

The main highlights of the draft guidelines are given in the points below:

• Out of the total capacity of 2000 MW, a capacity of 250 MW will be earmarked for bidding with Domestic Content Requirement (DCR).

• The levelized tariff for the term of the Power Purchase Agreement will be Rs. 5.79/kWh.

• The bidders will be free to avail fiscal incentives like Accelerated Depreciation, Concessional Customs and Excise Duties, Tax Holidays, etc.

• The upper limit for VGF is kept at Rs.1.0 Cr/MW for open category (Rs. 1.31 Cr/MW for projects in DCR category).

• Solar Energy Corporation of India (SECI) will be the nodal agency for implementation of this Scheme. A fund handling charge @1% of the total VGF disbursed shall be payable to SECI out of the sanctioned VGF.

• The Entire tendered quantity can be located in the Solar Parks in the State(announced by govt.) or Part of the quantity can be located in Solar Park and part outside Solar Park or Entire quantity can be located outside the Solar Park.

• The minimum project capacity under this scheme will be 10 MW.

• SECI will purchase power generated at the pre-determined tariff and sell the power to willing State Utilities under 25 years agreement at the applicable tariff after including a Trading Margin of Paisa Seven (7) per kWh.

• The procedure for conducting e-bidding and e-auctioning shall be framed by SECI.

It is good to note that promotional VGF is proposed for projects procuring domestic PV panels. The proposed PPA rate of 5.79 clubbed with VGF is an attractive proposition considering the drop in solar module prices in the recent years. However, the DCR could be raised to 500 MW to encourage foreign players to setup manufacturing facilities in the solar parks proposed in AP and other states, on the lines of ‘Make in India’ mantra of the central government.

Details can accessed here.

Our Previous blog on MNRE scheme for development of solar parks can be read here.