Cabinet approves setting up of over 5,000 MW of Grid-connected Solar PV Power Projects

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Mr. Narendra Modi, has announced that it has given its approval for setting up over 5,000 MW of Grid-Connected Solar PV Power Projects on build, own and operate basis.  The work will be implemented by Solar Power Developers (SPDs) with Viability Gap Funding (VGF) under Batch-lV of Phase-ll of the Jawaharlal Nehru National Solar Mission (JNNSM).The total investments expected under this scheme is about Rs 30,000 crore.

This would help in creating additional 5000 MW capacity of Grid-connected solar PV power generation projects in four trenches of each 1,250 MW capacity during four financial years viz. 2015-16, 2016-17, 2017-18 and 2018-19.   This would also help in employment generation of about 30,000 people in rural and urban areas with reduction of about 8.525 Million T of CO2 emissions into environment every year.

The tenders will be State-specific based on the demand from particular State.  States/Union Territories/Discoms/State Utilities are the beneficiaries. This will also facilitate to create employment and infrastructure in the States. Installation of 5000 MW Solar PV plants will generate about 8,300 Million units per year, which caters power to almost 2.5 Million households.

The estimated requirement of funds to provide VGF for 5,000 MW capacity solar projects is estimated to be Rs. 5,050 Crore (Rs 1.00 Cr / MW). This includes handling charges to Solar Energy Corporation of India (SECI)  @ 1% of the total grant disposed and Rs. 500 crore for payment security mechanism for all three VGF schemes of 750 MW, 2000 MW and 5000 MW.

The phasing of investment is estimated as under:

The upper limit for VGF will be Rs. 1 crore per MW. In case there is savings in the total VGF requirement, quantum of capacity of 5000 MW can be enhanced.

The Viability Gap Funding (VGF) scheme will be implemented for setting up over 5000 MW capacity of grid connected solar power projects by solar power developers on build, own and operate basis through open and transparent competitive bidding to provide solar power at a pre-defined tariff of Rs. 4.93 per kWh for the first year. The overall effort is to continuously reduce Government financial support for grid connected solar power as the prices of solar power comes down.

The Scheme will be implemented by SECI as per MNRE Guidelines. SECI shall prepare necessary bidding documents for inviting the proposals for setting up of projects on a competitive bidding through e-bidding. SECI will enter into Power Purchase Agreement (PPA) with the selected developers and the Power Sale Agreement (PSA) with the buying entities.

Requisite funds for provision of the VGF support will be made available to MNRE from the National Clean Energy Fund (NCEF), operated by Ministry of Finance.

Out of 5,000 MW, some capacity in each tranche, will be developed with mandatory condition of solar PV cells and Modules made in India. This will be called the Domestic Content Requirement (DCR) category and remaining will be in open category.