In a bid to achieve the target of 22-gigawatt solar capacity by 2022 under the national solar mission, the ministry of new and renewable energy (MNRE) has proposed to set up 15,000 MW of grid-connected solar capacity in three tranches, with the first tranche of 3,000 MW likely to entail total investment of over R18,000 crore from the developers.
The first tranche is expected to be completed by 2017. The second and third tranches of 5,000 MW and 7,000 MW, respectively, will be implemented by 2019. The proposed capacity addition is nearly five times the current solar power capacity in the country. Out of the 3,000 MW capacity in the first tranche, first 1,000 MW capacity will be set up in Andhra Pradesh on land already identified by the state government.
The scheme is proposed to be executed by NTPC that includes preparation of detailed e-bidding guidelines. As per the proposal, the developers will submit bids quoting a fixed levelised tariff for a period of 25 years. They will then commit to sell power from their plants to NTPC through its power trading arm NTPC Vidyut Vyapar Nigam (NVVN) at the quoted tariff.
In the first tranche, the proposal is to bundle 1,500 MW of unallocated thermal power from NTPC with 3,000 MW of solar power to be purchased by (NVVN) from the bidders who agree to produce and supply solar power at the lowest rate (not exceeding current SERC rate for such power). NVVN will then sell the bundled power to the interested state utilities under long-term power purchase agreement.
“The rate charged to the buyers will be weighted average tariff of the solar and thermal components (bundling ratio of 2:1), plus a trading margin of 7 paise per unit, which is expected to be attractive to utilities,” a government official told FE.
The tariff for thermal power component will be as per rates fixed by the Central Electricity Regulatory Authority (CERC) for power from the respective thermal power plants from which power is to be allotted.
As for 12,000 MW of capacity envisioned under tranche 2 and 3, implementation mechanism will be decided based on the experienced gathered from the execution of tranche 1. The other two tranches could require government support in the form of low-cost long-tenure loans, the proposal said.
The proposal prepared by MNRE has also envisaged that a portion of capacity to be developed be based on the domestically manufactured solar cells as well as modules and that such capacity be given certain incentives over others. The department of economic affairs has shot down the suggestion saying “the proposal of domestic content requirement in the bid process is certainly going to cause complications and lead to economic distortion. Hence, the DEA should not support this suggestion.”
NVVN will act as the sponsoring authority in charge of evaluating bids and issuing letters of intent. Further, it will also be entrusted with monitoring and commissioning of plants, including reporting of performance during the tenure of PPAs. The land for the projects will be provided on lease or ownership basis allowing developers to raise loans if required.