Revised Draft Guidelines for Implementation of Scheme for setting up of 2000 MW Grid-connected Solar PV Power Projects under JNNSM, Batch-III “State Specific VGF Scheme”

Revised Draft Guidelines for Implementation of Scheme for setting up of 2000 MW Grid-connected Solar PV Power Projects under JNNSM, Batch-III “State Specific VGF Scheme”

Phase-II, Batch-III: State Specific VGF Scheme

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. As implementation of solar parks have begun recently, it could be possible that Solar Parks in some of the States do not become available  soon.  For such States,  Solar  Projects would be  allowed  to  be  located outside solar parks with land being provided either by the State Government, or arranged by the Solar Power Developers (SPDs).

These Guidelines shall form the basis for Selection of Grid Connected Solar PV Projects under this Scheme. Out of the total capacity of 2000 MW, a capacity of 250 MW will be earmarked for bidding with Domestic Content Requirement (DCR).

MNRE shall specify the total State-wise Capacity of the Projects (both “Open Category” and “DCR Category”) based on commitments from the State for off take of not less than 90% of the Capacity to be invited by SECI before issue of Request for Selection (RfS). SECI shall tie up for the remaining capacity with the other Buying Entities for which the Host State shall facilitate Inter-State transfer of power.

1.7     Mechanism of Viability Gap Funding (VGF) in the Scheme

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 salient feature of the overall mechanism would be as follows:

a) The tariff payable to the Project developer is fixed at Rs.5.43/ kWh for the initial year and then escalated annually by 0.05/ kWh for next 20 years, resulting in the maximum allowable tariff of Rs 6.43 / kWh at the end of 21st year. The tariff would thereafter, remain fixed at Rs. 6.43/kWh. The levelized tariff for the term of the Power Purchase Agreement thus becomes Rs. 5.79/kWh. The bidders will be free to avail fiscal incentives like Accelerated Depreciation, Concessional Customs and Excise Duties, Tax Holidays, etc. as available for such projects. The same will not have any bearing on comparison of bids for selection. As equal opportunity is being provided to all bidders at the time of tendering itself, it is up to the bidders to avail various tax and other benefits. No claim shall arise on SECI for any liability if bidders are not able to avail fiscal incentives and this will not have any bearing on the applicable tariff.

b) The Project developer will be provided a viability gap funding based on his bid. 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). 

c) The Project developer has to infuse capital in the form of his own Equity for an amount of at least Rs. 1.2 Cr. /MW.  The remaining amount can be raised as loan by the developer.

d) The VGF  when  paid  by  the  SECI  may  be  used  to  return  part  of  the  loan  or developer contribution (in excess of 1.2 Cr. /MW) or a combination thereof as the case may be, in case investments have already been made. SECI will issue a letter confirming sanction/ grant of VGF at the time of signing of Power Purchase Agreement  (PPA),  so that  the  Project  developer  is  able  to  achieve  financial closure for full amount, if required.

e) The VGF will be released in six 50% on successful commissioning of the full capacity of the project (COD) and the balance 50% progressively over next 5 years subject  to  the  project meeting  generation  requirements  (CUF within specified range as per Clause 3.15.1), as under:

§ End of 1st  Year from COD – 10%
§ End of 2nd Year from COD – 10%
§ End of 3rd  Year from COD – 10%
§ End of 4th  Year from COD – 10%
§ End of 5th  Year from COD – 10%

If the project fails to generate any power continuously for any 1 year within 25 years or its major assets (components) are sold or the project is dismantled during this tenure, SECI will have a right to refund of VGF on pro-rata basis and if not paid by the developer then a claim on assets equal to the value of VGF released, on pro-rata basis as specified hereunder:

Year of default(From COD) SECI’s right to refund of VGF/ claim on assets(% of VGF paid)
Up to 5 years 100%
5-6 years 90%
6-7 years 80%
7-8 years 70%
8-9 years 60%
9-10 years 50%
10-11 years 40%
11-12 years 30%
12-13 years 25%
13-14 years 23%
14-15 years 21%
15-16 years 19%
16-17 years 17%
17-18 years 15%
18-19 years 13%
19-20 years 11%
20-21 years 9%
21-22 years 7%
22-23 years 5%
23-24 years 3%
24-25 years 1%

g) If the project is transferred or sold to a third party during its tenure (after initial lock-in period of 1 year), SECI will retain full rights to operationalize the PPA with the third party, which will be under full obligation to honour all the obligations and terms & conditions of the PPA.

h) Solar  Power   Developers (SPDs) and SECI shall enter into suitable VGF Securitization Agreement creating a charge over the Project assets in favour of SECI along with signing of PPA. SECI shall have a second charge over the Project assets in case of Projects being financed by lending institutions. In all other cases, SECI shall have the first charge over the Project assets to the extent of 110% of the VGF amount

i) In case the lending institution exercises its right to step in or take over the project, SECI will also have right to step in along with the lending institution to reclaim VGF in accordance with sub-clause (f) above or handover the project to another party for operation

1.8   Total Capacity and Portfolio of Solar PV Technology Projects

1.8.1    The total aggregated capacity of the grid connected solar power projects to be set up by Solar Power Developers on Build-Own-Operate (BOO) basis under Viability Gap Funding scheme in Phase-II, Batch-III of JNNSM shall be 2000 MW. The projects to be selected under this scheme provide for deployment of Solar PV Technology. However, the selection of projects would be technology agnostic and crystalline silicon or thin film or CPV, with or without trackers can be installed.

1.8.2    Already commissioned projects cannot be considered under this scheme. Projects under construction or projects which are not yet commissioned will, however, be considered, in case these projects are not already accepted under any other Central or State Schemes. Enhancement and augmentation of existing Projects irrespective of their capacities will not be considered as eligible Project under this scheme.

1.9      Implementation Agency

1.9.1    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. SECI will develop a suitable monitoring mechanism, conduct review meetings, conduct studies to analyse the performance of the projects, carry  out  random checks  to verify  compliance of quality standards and additionally the  compliance of DCR for  DCR Category. No separate funding shall  be provided by MNRE to SECI for these  activities.

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Draft-VGF_2000 MW_Guidelines_for-grid-solar-power-projects

About Ritesh Pothan

Ritesh Pothan, is an accomplished speaker and visionary in the Solar Energy space in India. Ritesh is from an Engineering Background with a Master’s Degree in Technology and had spent more than a decade as the Infrastructure Head for a public limited company with the last 9 years dedicated to Solar and Renewable Energy. He also runs the 2 largest India focused renewable energy groups on LinkedIn - Solar - India and Renewables - India
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