The Centre has offered a viability gap support of ₹70 lakh per MegaWatt (MW) for solar projects that will be built using domestically sourced cells and modules. This support will be implemented through the Central Public Sector Undertaking (CPSU) Scheme Phase-ll.
“This works out to a support of around 50 paise per unit for the projects bid out by public sector undertakings (PSUs). Under the scheme, PSU companies (like NTPC, NHPC or NLC) will first compete on the quantum of Viability Gas Funding (VGF) support. They will have to implement a solar power project that uses only domestically produced cells and modules,” a senior MNRE official told BusinessLine.
Under the scheme approved by the Cabinet Committee on Economic Affairs recently, the Centre aims to set up 12,000-MW grid-connected Solar Photovoltaic (PV) power projects by the government producers. A VGF support of ₹8,580 crore for self-use or use by Government or Government entities, both Central and State Governments has been approved for the same.
“After this, these projects will be offered by the PSUs to engineering procurement construction contractors. The PSUs may also proceed to source domestically produced cells and modules for developing the project. This VGF is subject to a tariff cap of ₹3.50 a unit on the power sold by the PSUs from these projects,” he said.
“The bids for first project for the scheme will be finalised this year,” the official added.
Under the earlier scheme, VGF for projects that used domestically sourced cells and modules was ₹1 crore per MW. For projects where domestically produced modules are used, the VGF was fixed at ₹50 lakh per MW.
“The revised quantum of support has been calculated based on the difference between the price of domestically produced cells and modules and imported ones,” the official said.
According to the Indian Solar Manufacturers Association, the installed domestic solar cell manufacturing capacity of the country is 3 GW while the installed Solar PV modules capacity is 9 GW.
“Currently the primary components for domestic manufacturing of cells, the wafers, are imported. Essentially there is a 40 per cent value addition to the imported product that takes place in India. The price between the imported solar cells and domestic cells has also narrowed so the present VGF offered is optimum,” an official at a private solar power project developer said.
The projects will be developed through PSUs in four years, from 2019-2020 to 2022-2023.
Source: Hindu Business Line