India's National Solar Mission, Phase II


With India’s Ministry of New and Renewable Energy (MNRE) publishing the draft guidelines for the next stage of the Jawaharlal Nehru National Solar Mission (JNNSM) on Saturday, the final guidelines are expected to be confirmed ‘soon after’ Thursday, when any final comments are received.

A change to the payment of the viability gap funding assistance for developers is one of the notable aspects of the 750 MW first batch of the second phase of the JNNSM but the inclusion of another domestic content requirement is liable to ruffle feathers further.

The World Trade Organization is already considering a complaint by the U.S. about the domestic content requirement of the previous phase of the JNNSM, with Japan and Australia subsequently joining consultations.

In its current form, the latest stage of the national policy stipulates half of the projects – 375 MW – must feature cells and modules manufactured in India, with developers stipulating whether they want to develop open projects or schemes under the domestic content requirement. The draft guidelines do not specify whether there is any incentive for developers to opt for the latter.

Projects for consideration must be a minimum 10 MW and maximum 50 MW and companies can bid to develop no more than a total 100 MW across three different projects in different locations.

Under the scheme, developers will be paid INR5.45/kWh (US$0.09/kWh) by the Solar Energy Corporation of India (SECI) with the power then being sold on to state distribution companies by SECI for INR5.50/kWh via 25-year PPAs.

Change to viability gap funding

Developers can apply for support under the viability gap funding scheme to cover either 30% of project costs or INR25 million/MW, whichever is the lower, provided they supply at least INR15 million/MW from their own funds.

In a change to the payment system – underwritten by power generation company NPTC Vidyut Vyapar Nigam Ltd (NVVN) – developers will receive half the funding when a project is commissioned and a further 10% per year at the end of each of the next five years afterwards, with measures in place to claw back a percentage of the funding in case of project failure in the subsequent 25 years.

The guidelines outline penalties for delays in project completion and failures to hit generation targets and SECI will maintain a waiting list of up to 100 MW of projects in case of failures.

The MNRE has kept in place a stipulation the ownership of developer companies cannot change between the signing of a PPA and one year after energy starts being supplied.

The caveat is an attempt to prevent foreign companies buying up the controlling interests in Indian developers to gain back door entry to the Indian market.