Implementation of Project for setting up of 15,000 MW of Grid-connected Solar PV Power plants through NTPC/ NTPC Vidyut Vyapar Nigam Limited under National Solar Mission

 

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for the implementation of the scheme for setting up of 15,000 MW of Grid-connected Solar PV Power projects under the National Solar Mission through NTPC/ NTPC Vidyut Vyapar Nigam Limited (NVVN) in three tranches namely, 3000 MW under Tranche-l under mechanism of Bundling with Unallocated Coal based Thermal Power and fixed levellised tariffs, 5,000 MW under Tranche-ll with some support from Government to be decided after getting some experience while implementing Tranche-l and balance 7,000 MW under Tranche-Ill without any financial support from the Government.

Successful completion of additional 15,000 MW capacity of Grid-connected solar PV power generation projects, mainly in the private sector, with largely private investment, under the National Solar Mission would accelerate the process of achieving grid tariff parity for solar power and also help reduce consumption of kerosene and diesel, which is presently in use to meet the unmet demand.

In Tranche-l, which will be Batch-II of Phase-II of the National Solar Mission, 3000 MW capacity of solar PV power plants will be based on bundling of solar power (3000 MW) with unallocated thermal power (1500 MW) in the ratio of 2:1 (in MW terms), for which the required 1500 MW unallocated thermal power has been made available by the Ministry of Power. The bundled power will be allotted to various States that come forward to (i) provide land for setting up the solar power projects and (ii) purchase a major portion of the bundled solar power for consumption within the State (iii) ensure connectivity to the solar power project. The capacity allotted to each such State will be set up through developers, to be selected through international competitive bidding by NTPC /NVVN. Both private and government companies would be free to bid for projects.

1000 MW capacity out of the 3000 MW under the bundling scheme will be set up on land already identified in Andhra Pradesh. The balance 2000 MW capacity under the Bundling Scheme will be allotted in other interested States that come forward.

It is estimated that implementation of Tranche-l of the scheme will entail total investment of over Rs.18,000 crore, all of which will be met by project developers, mainly private.

A Payment Security Mechanism / Working Capital Fund with an estimated corpus of Rs. 2300 crore to cover 3 months payment for bundled capacity of 3000 MW of Solar Capacity with 1500 MW NTPC Coal Power, will be set up to ensure bankability of PPAs and timely payment to developers. This will be evolved through collaborative efforts of Government of India and Solar Project Developers. The modalities for setting up of Payment Security Mechanism / Working Capital Fund will be finalized subsequently. Accruals from encashment of Bank Guarantees, penalties on developers, etc. will also go into this fund.

Some capacity will be earmarked out of the total procurement under this scheme with provisions of domestically manufactured solar cells as well as modules. The quantity to be fixed with Domestic Content Requirement (DCR) in each tender will be prescribed by Ministry of New and Renewable Energy (MNRE) based on the prevailing market conditions from time to time. Bids received under both the categories (one with DCR requirement and the other without any such requirement) will be evaluated and successful bidders selected independently. Further, this DCR will also be technology agnostic that is applied on both the crystalline silicon and thin film SPV cells and modules.
Background
The first Phase of the National Solar Mission (2010-2013) had a target of 1100 MW for Grid-connected solar power generation capacity, against which 1685 MW was set up in the country under various schemes. Further capacity addition of 9,000 MW comprising 3,000 MW under Central schemes and 6,000 MW under State initiatives/ other mechanisms was envisaged In the 2nd phase of the Mission (April 2013-March 2017).

Now that sufficient experience is available in India in this field and the Government is keen to expeditiously promote solar power in the country, it is proposed to give a quantum jump to development of solar power in India through market driven approach, wherein the role of subsidies and direct Government support is gradually phased out. Specifically, it is proposed to significantly enhance capacity addition in the 2nd phase itself under Central schemes through various mechanisms.

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JNNSM Phase II: Solar developers show preference for imported equipment…

 

The latest round of bidding for solar projects under the Jawaharlal Nehru National Solar Mission (JNNSM) has attracted an overwhelming response from solar project developers — bids were received from 68 companies for 122 projects for a total of 2,170 MW, against the allocation target of 750 MW.

The US-headquartered Azure Power (200 MW), Welspun (160 MW), IL&FS (150 MW) and Essel Infra (100 MW) are among the major bidders.

Under the ‘JNNSM Phase II’, rolled out for bidding by the Government-owned Solar Energy Corporation of India, project developers bid for a capital grant from the Government, or ‘viability gap funding’. Winning bidders will be those who ask for the least amount of funding for selling their power at a fixed tariff of Rs 5.45 per kWhr to the Corporation.

The Phase II process also split the 750 MW on offer equally into those projects for which the developers would need to use locally made equipment, and those that had no such restriction. Accordingly, 375 MW were on ‘domestic content requirement (DCR)’ route, and the other 375 MW under ‘open’ category.

Bidders showed a marked preference for the ‘open’ category. As many as 86 projects worth 1,470 MW were bid for under the ‘open’ category, where the requirement for ‘viability gap funding’ is expected to be very low. Under the DCR category, bids were submitted for 36 projects for a total of 700 MW. Of the 68 companies, 13 have submitted bids under both categories.

How much VGF each bidder has asked for will be known on February 20, when the Corporation opens the financial bids.

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India Draws Bids for Triple Solar Capacity Offered for Phase II of National Solar Mission…

 

India received bids for almost triple the 750 megawatts of solar capacity offered after enticing developers with grants for the first time that will cover part of the cost of the plants.

The state-run Solar Energy Corp. of India received 58 bids for 2,170 megawatts in the country’s first national auction of photovoltaic licenses in two years, Tarun Kapoor, joint-secretary at the Ministry of New and Renewable Energy, said in an interview today in New Delhi.

The technical bids will be opened today to check whether companies meet the qualifications to build plants, Rajendra Nimje, managing director of Solar Energy Corp., said in an interview. The financial bids will be opened in about a month after the initial evaluation is finished, he said.

The tender offers improved revenue security to investors seeking a foothold in a market, where the cost of sun power may equal that of other sources within three years.

The government is set to provide as much as 18.75 billion rupees ($303 million) in grants for the projects. That will reduce construction costs, allowing the winning developers to sell the electricity they generate at about the same price as conventional power.

The tender may be the “least risky” of at least nine national and state-level auctions held so far in India, said Bharat Bhushan, New Delhi-based solar analyst for Bloomberg New Energy Finance.

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Cash Buffer Lures Risk Averse to India Solar Auction...

 

India’s first national auction of solar permits since 2011 offers improved revenue security to investors seeking a foothold in a market where the cost of sun power may equal that of other sources within three years.

The state-run Solar Energy Corp. of India is inviting bids by Jan. 20 from companies to build 750 megawatts of capacity. For the first time, the government will provide as much as 18.75 billion rupees ($302 million) in grants to reduce plant-building costs to entice participation.

That will help lower one of the main hurdles to Indian solar investment: the risk cash-strapped state utilities buying the power will default, leaving plants unable to service debt, said Vineet Mittal, managing director of the country’s biggest photovoltaic developer, Welspun Energy Ltd. The tender still may struggle to draw international firms put off by a volatile rupee, uncertainty before national elections due by May, and a fraction of the solar capacity available in China and Japan.

“Security of payment has been addressed very nicely,” said Mittal, whose company is a unit of Leon Black’s Apollo Global Management LLC-backed Welspun Group. “But I don’t expect companies to queue up. It’s not as lucrative” with panel prices recovering from record lows.

The tender is India’s third under its National Solar Mission, which seeks to drive down the cost of sun power to diversify the country’s energy mix. India suffers from peak-hour power shortages of as much as 25 percent, and renewables offer a way to boost generation without increasing pricey fuel imports.

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Second set of clarifications on NSM Phase II Batch I issued by SECI...

 

Solar Energy Corporation of India has uploaded second set of clarifications on the 750 MW NSM Phase-II Batch-I bidding documents.

SECI has held a stake holder's meeting on 2nd January 2014 to discuss the unresolved issues post pre-bid meeting of 19th November 2013.

The clarifications covers various issues related to RfS, PPA, and VGF Securitization Agreement of tender documents.

 

Sl. No.		Queries	SECI’s Replies
VGF Related Queries
1.	Ranking of SECI’s Charge		SECI will have  second charge along with first charge of lending institutions. VGF Securitization Agreement shall be suitably amended.
2.	Calling of Event of Defaults		SECI shall call / trigger event of defaults pursuant to VGF Securitization   Agreement    with   consent   of   lending Institution (if any).   VGF Securitization Agreement shall be suitably amended.
3.	SECI’s Right to Step in		SECI will have the right to step-in along with the lending institutions (if any). However, SECI will exercise this right only in the event that lending institution exercises its right to step in and take over the Project for recovery. Further, in the event the lending institution exercises its right to take over the Project for substitution of SPD, the substituting SPD shall have to necessarily meet the eligibility conditions as stipulated in the RfS document and shall honour the existing PPA and VGF Securitization Agreement.
4.	Timing of creation of SECI’s Charge on the Project Assets		It is clarified that SPDs are required to create SECI’s charge before raising of first VGF Disbursement request.
5.	Provision of Capacity Utilization Factor (CUF) adjustment on account of abnormally low solar irradiance year		Provision to adjust CUF on account of abnormally lowsolar irradiance in an year shall be incorporated in VGF Securitization Agreement and Power Purchase Agreement (PPA)  in following manner: Abnormally low solar irradiance year shall be declared if the actual radiation in the year under consideration is less than 50% of average values available from the nearest IMD/SRRA stations.   VGF Securitization Agreement & PPA shall be suitably amended.
6.	Inclusion of Force Majeure Conditions in the VGF Securitization Agreement.		Force Majeure conditions on the similar line of PPA shall be included in the revised VGF Securitization Agreement.   For avoidance of any doubt, in case of occurrence of Force-majeure conditions resulting in partial damage or total damage, if the SPD is able to revive the project in a mutually agreed time schedule, then disbursement of VGF will be continued. In case the SPD is unable to revive the project, SECI will have the claim from the insurance settlement of the Project.   VGF Securitization Agreement shall be suitably amended.
7.	Starting preamble point F: SPD would be eligible to receive VGF support amounting to maximum Rs. [Insert VGF Amount in Cr.] Crores, which shall be released by SECI subject to funds made available by MNRE		The phrase “subject to funds made available by MNRE” shall be deleted.   VGF Securitization Agreement shall be suitably amended.
8.	Submission of Land Conversion documents		A   no   objection/   Consent/   suitability/   Conversion certificate from the concerned and competent authority for land usage for development of Solar power Project, is required to be submitted by SPDs, not later than third Tranche of VGF Disbursement.
9.	Article 3.1 (d) : submission of irrevocable and un-conditional personal guarantee of SPD’s promoters / directors		Deleted
10.	Article 4.1: Event of Default: f) Change in the controlling shareholding or change in the shareholding pattern resulting into change in controlling shareholding pattern of the SPD without prior written intimation to SECI h)  If the property given as mortgage depreciates in value or is rendered inadequate to such an extent that in the opinion of SECI further additional security to the satisfaction of SECI should be given and such security is not given, in spite of being called upon to do so k) If SPD formed by successful consortium as a special purpose vehicle for execution of the Project is engaged in any business or activities either alone or in partnership or joint venture other than execution of the Project, without the prior written consent of SECI		Deleted.
11.	Incorporation of clause to facilitate faulty equipment		Provision  to facilitate replacement of faulty / defective equipment during the course of operation of the Project shall be suitably incorporated in the VGF Securitization Agreement
12.	Article 7.1 (a) Inspection of Book of Accounts of SPDs		The  entire  clause  shall  be  amended  to  address  the apprehensions of SPDs in following manner: “The VGF is supported by the Government of India through budgetary resources, and therefore SPD shall maintain accounts and documents related to VGF in a manner which shall meet the requirements of guidelines / instructions issued by the Government of India from time to time.”
13.	Article 7.1 (c) : SPDs not to sell, gift lease, rent transfer or dispose-off in any other manner		The   clause   shall   be   amended   to   incorporate   the provisions of PPA.
General Issues
1.		Elaboration of Project Capacity and  Contract  Capacity  as defined   in   MNRE   guidelines/ RfS/ PPA/ VGF Securitization agreement.	Project  Capacity  as  defined  in  the  guidelines  is  the minimum AC capacity at Project bus bar as declared by the bidder for the purpose of bidding based on which the bidder shall seek VGF. It may happen that the Project Capacity at the Project bus-bar is higher than the capacity at the Delivery Point on account of losses. No extra VGF shall be payable for this extra capacity.   The Contracted Capacity is the maximum AC capacity at the delivery point on which the PPA and VGF securitization agreement shall be signed. SPD shall suitably design the Project so as to ensure that the SPD can demonstrate the Project capacity at the bus bar. SPD shall take into account all the losses at various points including transmission losses from Project bus bar up to the delivery point and the SPD is able to deliver the Contracted Capacity at the delivery point.
2.		Connectivity letter: It is requested that letters indicating a connectivity time period of 24 months (which will not meet the 13 month period as stipulated in RfS) may be accepted by SECI.	SECI may provisionally accept connectivity letters only in cases where the STU has indicated that they will make all efforts to provide connectivity within the time period as specified by SECI. However, the SPD shall be solely responsible to ensure availability of evacuation facility so as to commission the Project within 13 months from signing of PPA. Further, the bidders are advised to select the Project locations where the evacuation facility is available and projects can be completed within the stipulated time.
3.		Controlling  shareholding:  It  is requested              that         since fully, compulsory and mandatory convertible shares/debentures are allowed, the requirement of more than 50% of the paid up capital may be relaxed.	To bring more clarity on Controlling Shareholding, it is clarified that, Controlling shareholding shall mean not less than 51% of the voting rights and paid-up share capital   (including   fully,   compulsory  and   mandatory convertible   Preference   shares/Debentures)   in   the Company/Consortium developing the project.   For avoidance of any doubts, it is clarified that fully, compulsory and mandatory convertible Preference shares/Debentures convertible at any date, or equity in the name of Promoter has to remain not less than 51% from the date of bid submission up to completion of 1 year after COD.   Necessary amendments shall be issued shortly.
4.		Selection of Projects: Elaboration regarding order of preference to be indicated by bidders	The  Clause  3.6.3  of  the  RfS  shall  be  amended  by modifying the condition “strictly in the ascending order of VGF sought for each Project.” with “strictly in the ascending order of VGF sought for each Project in respective category”. It is further clarified that within one category, the bidder cannot give a higher preference for a Project with higher VGF Amount (Preference-1 being the highest preference with lowest VGF Amount in the respective categories). Thus, the Projects shall be ranked from 1-10 as per the Bidder’s preference, but within a single category, the Bidder must indicate preference in the increasing order of VGF sought. Necessary amendments in RfS will be issued shortly.
5.		Eligibility           of          LLCs for participation in the process	It is clarified that Limited Liability company (LLC) shall be allowed only for those LLCs which are formed by companies. Necessary amendments in RfS will be issued shortly.
6.		Difference in methodology specified in Guidelines and RfS for conversion of EMD Amount into PBG	Single  EMD  can  be  submitted  by  the  bidder  for  the cumulative capacity of Projects for which bids are submitted. In case a bidder submits proposal for a capacity more than 100 MW in line with provision as per clause 2.7.e, of guidelines, EMD shall be submitted for 100 MW only. In case of successful bidders, EMD @ Rs 10 Lakhs/ MW shall be returned on submission of performance guarantee for the selected projects @ Rs 30 Lakh/ MW on the same day of release of EMD by SECI.
7.		Allocation        of     Part Capacity: during the selection process	During the Project selection process, there is a possibility of exceeding 100 MW which may qualify for selection depending on the Project size. In such cases the bidder may have to accept part capacity for the last Project in view of overall capacity restriction of 100 MW. It is mandatory for the bidder to accept such part capacity allocation and in case bidder refuses, the EMD value calculated for the part capacity of the last Project shall be forfeited.   Illustration: Suppose a bidder has submitted bid for a cumulative capacity of 150 MW comprising of 7 projects and based on the VGF quoted 120 MW capacity is getting selected  for  allocation.  The  bidder  has  already  got allocation of 90 MW comprising of 3 projects. Further if the last project getting selected is of 30 MW, only 10 MW can be allocated to restrict the total allocation to 100 MW. IN such a scenario it is mandatory for the bidder to accept the 10 MW towards the fourth project. In case bidder refuses to accept 10 MW, EMD for 10 MW (i.e. INR 1.00 Cr.) shall be forfeited.
8.		Clarification         regarding Open Access/   Wheeling   Charges   in PPA.	SECI shall be responsible for taking the Open Access/ Wheeling charges, wherever applicable.  Clauses 4.2.2 and 4.2.3 of PPA shall be suitably amended.
9.		Conversion of land for setting up of Solar PV Project	Requirement of land suitable for industrial use shall be replaced  by  “suitable  for  solar  power  development”. Accordingly, Format 6.10 of the RfS shall be amended.
10.		Installation of necessary equipment for monitoring of solar irradiance (including GHI, DHI and DNI)	The requirement of DNI measurement shall be removed. Accordingly, Clause 7.2 of PPA shall be amended.
11.		Clarification regarding availing of Accelerated Depreciation (AD) benefits	By  availing  VGF  if  SPD  or  its  Promoting  companies/associated companies at any point of time during the term of PPA, avails AD benefits against this Project, the tariff paid by SECI shall stand reduce to INR 4.75/ unit from the date of commissioning of the Project.
12.		Commissioning Procedure: Inverter Capacity	SPDs are generally required to install inverters having rated  capacity  equal  to  the  capacity  of  the  Project. However   a   negative   tolerance   of   10%   shall   be acceptable. For example, in case of a 10 MW project, the minimum acceptable rated capacity of inverters shall be 9 MW.   Necessary amendments in RfS and PPA shall be issued shortly.
13.		While filling the Formats, for the clauses which are not applicable for the bidder, does he need to delete them or strike out in the document submitted by him?	For the clauses not applicable for the bidder, he shall strike out such clauses and NOT delete them from the Formats.
14.		Leasing        of      Equipment and machinery:	It is once again clarified that Leasing of plant equipment and machinery is not allowed.

 

Complete document can be downloaded from this link.

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