The Ministry of New and Renewable Energy (MNRE) has issued amendments regarding the setting up of 12 GW of solar projects with Viability Gap funding Support (VGF) by Central Public Sector Undertakings (CPSU) for self-use or use by government entities.
Earlier, the MNRE had issued a notification regarding the modalities and role of DISCOMs to ensure the smooth implementation of the second phase of the CPSU program.
The program aims to provide the necessary policy framework for the selection and implementation of 12 GW or more of grid-connected solar PV projects with VGF by government producers such as public sector undertakings. The total project cost of the 12 GW solar projects under this program is estimated to be Rs. 480 billion.
As per the latest amendments, the power produced by the government entities can be used for self-use or use by government entities either directly or through distribution companies (DISCOMs) at the mutually agreed rate of Rs. 2.80/kWh. This rate would include all the charges, namely, wheeling and transmission charges, point of connection charges and losses, and cross-subsidy charges, among others. Earlier, as per the existing clauses, the rate was fixed at Rs. 3.5/kWh.
The VGF is provided with an objective to cover the difference between the domestically produced solar cells and modules and imported solar cells and modules. The maximum permissible VGF has been kept at Rs. 7 million/MW, and the actual VGF will be decided through bidding.
The Indian Renewable Energy Development Agency Limited (IREDA) will be entrusted with the task of carrying out the bidding process. Previously, the Solar Energy Corporation of India (SECI) was the implementing agency for this program.
As per the amended clause, the VGF will be released in two tranches:
• 50% on the award of the contract to the EPC contractor
•Balance 50% on the successful completion of the project
As per the amendment, IREDA will handle the program on behalf of the MNRE, including conducting the bidding through the VGF route. IREDA will be given a fee of 1% of the VGF disbursed for conducting bidding, handling funds, and monitoring the projects. Earlier, SECI used to handle the program on behalf of the MNRE.
The amendments also add that solar power projects up to 500 MW should be commissioned within 24 months from the date of the letter of award (LoA).
For projects more than 500 MW, the capacity of 500 MW should be commissioned within 24 months from the date of the LoA, and the balance capacity has to be commissioned within the next six months. As per the earlier guidelines, the solar power projects should be commissioned within 18 months from the date of the issuance of the LoA.
According to the new clause, the IREDA will be permitted to award solar power project capacities under the CPSU program Phase II of up to 50 MW to any willing government entity at the lowest rate discovered in the bidding process within four months of such bidding. The limit of 50 MW is for project capacities allotted to one government entity for the duration between the two bids under the CPSU program.
