Final Draft Guidelines for Selection of 3000 MW Grid – Connected Solar PV Power Projects under Batch-II

National Solar Mission 

Phase-II (2013-17)

Guidelines for Selection of 3000 MW Grid – Connected Solar PV Power Projects under Batch-II

State Specific Bundling Scheme”

Government of India

Ministry of New and Renewable Energy

January 2015

Click here for the Final Draft document


1.0          Preamble


The  National  Solar  Mission  (NSM)  launched  in  January  2010  is  a  major  initiative  of the Government of India (GoI) with active participation from States to promote utilization of solar energy to supplement the country’s energy needs. It aims at establishing India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible. The Mission had set a goal, amongst others, for deployment of 20,000 MW grid connected solar power capacity by 2022 in 3 phases (1000 MW in first phase up to 2012-13 -, 9000MW in second phase from 2013 to 2017 and 10,000 MW in third phase from 2017 to 2022). GoI is working on substantially scaling up these targets through consultations with the various Stakeholders.

In order to facilitate grid connected solar power generation in the first phase, a mechanism of “bundling” relatively expensive solar power with thermal power from the unallocated quota of the Government of India (Ministry of Power) generated at NTPC coal based stations, which is relatively  cheaper,  and  onward  sale  of  the  bundled  power  to Distribution  Utilities  at  an affordable price, was adopted. A scheme for selection of 1000 MW Grid-connected solar power projects based on this Mechanism was implemented through NTPC Vidyut Vyapar Nigam Limited (NVVN). In the second phase, it is envisaged to select solar power projects under various Central Schemes. These include the Viability Gap Funding scheme for Batch -I of 750 MW capacity Solar PV projects that has already been introduced and is being implemented through Solar Energy Corporation of India (SECI).

1.1          Status and achievement against 1000 MW Capacity Grid-Connected Solar Power Projects under Phase-I Bundling Scheme implemented through NVVN:

Solar PV as well as Solar Thermal power projects with an aggregate capacity of 970 MW (besides 84 MW selected under Migration Scheme) were selected in two batches (Batch-I during 2010-11 and Batch- II during 2011-12) through a process of tariff based reverse bidding. The resulting tariffs in Batch-I for SPV projects ranged between Rs.10.95 and Rs.12.76 per unit, with average of Rs.12.12 per unit and for Solar Thermal Projects the tariff ranged between Rs.10.49 and Rs.12.24 per unit, with average tariff being Rs.11.48 per unit. In Batch-II, for Solar PV Projects, the tariff ranged between Rs.7.49 and Rs.9.44 per unit, with average tariff being Rs.8.77 per unit. The Solar Power from these plants is being purchased by NVVN and is being sold to Distribution Util ities/ Discoms  after  bundling  with  power  from  the  unallocated  quota  of  power  from  Coal  Based Stations of NTPC on equal capacity (MW) basis, thus effectively reducing the average per unit cost of solar power. A total capacity of 718 MW has been commissioned so far under Phase-1.

1.2          Phase-II Batch-I: 750 MW Viability Gap Funding (VGF) Scheme:

This scheme for setting up of 750MW of Grid Connected Solar PV Projects with VGF support from National Clean Energy Fund (NCEF) is being implemented through Solar Energy C orporation of India (SECI). It entails purchase of power from developers at a fixed tariff of Rs.5.45/ unit (Rs.4.75/unit in case benefit of Accelerated Depreciation is availed) and payment of VGF to the developers  as  per  their  bids,  limited to a maximum  of  Rs.2.5crore/MW).  Bids  for  the  same (reverse bidding on the VGF) were invited by SECI in October, 2013 in two Categories: 375MW Capacity  under  Domestic  Content  Requirement  (DCR)  and  375  MW  Capacity  under  Open Category. Power Purchase Agreements with the successful bidders / developers have since been signed in March 2014. The Projects have a Schedule of Commissioning of 13 Months from the Date of Signing of PPA.

1.3          Phase-II Batch-II Scheme:

1.3.1     MNRE now proposes to add a total Solar PV capacity of 3,000 MW to be implemented through NVVN as part of Phase-II. The scheme envisages setting up of Grid-connected solar PV power plants of 3,000 MW aggregate capacity through open competitive bidding.

1.3.2      Phase-II, Batch-II : State Specific Bundling Scheme

These guidelines are for 3000 MW. MNRE will indicate the total quantity for various States based on response received from the States. NVVN may then procure that quantity through one or more State specific tenders.

Scope of the Guidelines

The scope of these guidelines is limited to providing the necessary policy and operational framework for development of projects under the above mentioned “ State Specific Bundling Scheme”. These guidelines are independent and will have no bearing on the projec ts already selected under earlier schemes of NSM Phase-I & Phase-II, Batch – I.


2.1         NSM Phase-II Batch-II State Specific Bundling Scheme for 3000 MW Solar PV Projects

The 1000 MW Bundling Scheme introduced under NSM Phase-I has been successful in incentivizing setting up of a large number of Solar Power Projects and minimizing the impact of tariff on the distribution companies. The proposed 3000 MW Solar PV Projects to be selected under Batch-II of NSM Phase-II, will be implemented by NVVN on Solar Parks to be developed through association of Central and State Agencies / Land provided by State Governments or Land identified and arranged by Solar Power Developers in the respective States.

MNRE is facilitating development of 25 Solar Parks to accelerate the Solar Capacity Addition in various States. The bidder will approach the Solar Park Implementation Agency (SPIA) for allotment of land and connectivity. The SPIA shall provide the details of land and the timelines for availability, allotment, possession and connectivity for the projects before submission of bids. The SPIA will provide the Cost of Land, Annual Charges, and Connectivity Charges etc. which the developer would take into consideration in their bid.

There could be three (3) situations:

(A) Entire tendered quantity can be located in the Solar Parks in the State;

(B)  Part of tendered quantity can be located in Solar Park and part outside Solar Park; and

(C)  Entire tendered quantity can be located outside the Solar Park.

2.2         Objectives:

The main objectives of the scheme are as follows:

  1. To facilitate the scale  up of solar capacity addition under  NSM Phase-II and achieve economies of scale
  2. To supplement grid power

iii.         To facilitate fulfilment of RPO requirement of the obligated entities.

  1. To facilitate speedier implementation of the new projects to be selected to meet the Phase-II target of NSM;
  2. Provide long term visibility and road map for solar power development enabling creation of India as manufacturing hub in the Solar P

2.3         Mechanism of Operation:

The 3,000 MW Solar PV Capacity will be set up based on the model of bundling of solar power with unallocated thermal power and fixed levelised tariffs. The mechanism of operation of this model shall be as enumerated below:

1)            Minimum project size will be 10 MW. NVVN will divide the entire quantity into projects of uniform size as far as possible. NVVN may also divide the bid lot into different sized projects also to match plot sizes in the solar park or to provide fair participation. For situation B & C as given in Para 2.1 above, range of project size starting from 10 MW may be given by NVVN.

2)           The bidding will be State specific and conducted through e-bidding. It will be based on fixed levelised tariffs.  The  developers  will   submit bids quoting a fixed   levelised tariff  for  the  entire  project  duration  of  25  years.  They will then  be  committing  to sell   power   from  their plants to NVVN at the quoted   tariff   over   the   25   year period.

3)            The selection of bids will be done based on the tariff quoted by the bidders. Selection will be based on lowest quoted levellised tariffs. The quoted tariff cannot be higher than the Central Electricity Regulatory Commission (CERC) Approved Applicable Tariff as on the last date of receipt of financial bids by NVVN.

4)          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 NVVN for any liability if bidders are not able to avail fiscal incentives and this will not have any bearing on the discovered tariff.

5)            NVVN will purchase the Solar Power generated from the selected Solar PV plants at the quoted tariffs and Thermal Power at the Tariff as determined by CERC as per Regulations from time to time for power from the respective Thermal Power Plant from which power is allocated. NVVN will bundle the Solar Power with unallocated Thermal Power from Coal based stations of NTPC on 2:1 basis (2 MW of Solar with 1 MW of Thermal), and sell the Bundled Power to willing State Utilities under 25 years Power Sale Agreements (PSAs), at Weighted Average Tariff of the Solar and Thermal components plus Trading Margin of Paisa Seven (7) per kWh. The weighted average of tariff will be separately calculated for each State for the Solar Power.

2.4         Solar PV Projects

MNRE will fix the lot size for each state out of the 3000 MW and define the quantum of “DCR” in each lot. Thereafter, NVVN will issue Request for Selection (RfS) in one or more than one Lot as per the preparedness in the Solar Park in that State and acceptance of the State/ Discom to buy the power.

This  scheme  provides  for  deployment  of  only  Solar  PV  Technology  Projects. However,  the selection of projects would be technology agnostic and crystalline silicon or thin film or CPV, with or without trackers can be installed.

Under the scheme, the developer has the option of  Leasing Solar Plant equipments from Foreign parent/affiliate.

Click here for the Final Draft document

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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