Govt approves Rs 5050cr funding to push solar projects

The government today approved a 'viability gap funding' (VGF) of Rs 5,050 crore for setting up over 5,000 MW of grid linked solar power projects under the Jawaharlal Nehru National Solar Mission.
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Jan 21, 2016, 11.35 AM | Source: PTI

Govt approves Rs 5050cr funding to push solar projects

The government today approved a 'viability gap funding' (VGF) of Rs 5,050 crore for setting up over 5,000 MW of grid linked solar power projects under the Jawaharlal Nehru National Solar Mission.

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Govt approves Rs 5050cr funding to push solar projects

The government today approved a 'viability gap funding' (VGF) of Rs 5,050 crore for setting up over 5,000 MW of grid linked solar power projects under the Jawaharlal Nehru National Solar Mission.

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Govt approves Rs 5050cr funding to push solar projects
The government today approved a 'viability gap funding' (VGF) of Rs 5,050 crore for setting up over 5,000 MW of grid linked solar power projects under the Jawaharlal Nehru National Solar Mission.

"The Cabinet Committee on Economic Affairs has given its approval for setting up over 5,000 MW of Grid-Connected Solar PV Power Projects on build, own and operate basis," an official statement said.

After the meeting, Power Minister Piyush Goyal said, "To push solar energy programme, a scheme to provide Rs 5,050 crore VGF for setting up 5,000 MW capacity has been approved."

Elaborating further the minister said, "The VGF will be provided through reverse bidding. Whosoever will quote the lowest VGF will win. One part of these funds will be for domestic modules. These companies will be given Rs 1.25 crore per MW and those coming through international competitive bidding will get Rs one crore per MW)."

Goyal expressed hope that the VGF reverse bidding auction will help in reducing the power tariff in future.

According to the statement, it will be implemented by Solar Power Developers (SPDs) with VGF under Batch-lV of Phase-ll of the JNNSM.

The total investments expected under this scheme is about Rs 30,000 crore.

It said that 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 crore/MW).

This includes handling charges to Solar Energy Corporation of India (SECI) at the rate of 1 percent 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 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, it said.

Under the scheme 500 MW capacity will be created this fiscal while during four financial year from 2016-17 to 2019-20, solar power generation capacity of 1,125 each year will be set up.

The scheme will be implemented on build, own and operate basis through competitive bidding to provide solar power at a pre-defined tariff of Rs 4.93 per kWh (unit) for first year. The Scheme will be implemented by SECI as per Ministry of New and Renewable Energy (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.

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