Draft guidelines for selecting 1500 MW grid-connected solar PV power projects

These solar PV projects will be selected by NTPC and developed under the ‘bundling scheme’. The selection of projects will be through a tariff-based reverse bidding process

By EB Bureau

Monday, September 15, 2014:  The Ministry of New and Renewable Energy (MNRE) recently announced the draft guidelines for selecting 1,500 MW grid-connected solar PV projects under the second batch of Phase II of the National Solar Mission.

The highlight of the draft guidelines is the bundling scheme for implementing these solar PV projects through NTPC Vidyut Vyapar Nigam Limited. Under the bundling scheme, solar power is bundled with thermal power generated by NTPC and provided to distribution companies at an affordable price.

These solar PV projects will be selected by NTPC through a tariff-based reverse bidding process. NTPC will purchase power from the developers as per their bid tariff and sell bundled power to distribution companies after adding a trading margin. It will also enter into power purchase agreements (PPA) with the developers and power sale agreements (PSA) with the distribution companies.

Selection of projects over two phases: According to the draft guidelines, the projects will be selected in two phases. While the projects for a capacity of 750 MW are to be selected in the first phase (FY 2014-15), projects for the remaining capacity of 750 MW will be selected in the second phase (2015-16).

Project capacity: As per the guidelines, in order to connect a project to the transmission utility substations at 33 kV and above, the minimum capacity should be 10 MW with the maximum capacity going up to 50 MW. A company can submit an application for a maximum of five projects at different locations, subject to a maximum aggregate capacity of 100 MW per phase. The land required for each project should be a minimum of 2 hectares per mega watt (MW).

Eligibility criteria

The guidelines specify that already commissioned projects cannot be considered under this scheme, and these projects should be based on known technology like crystalline silicon, thin film or concentrated photovoltaics (CPV).

A non-refundable processing fee of Rs 200,000 needs to be submitted for each project with a capacity of up to 20 MW, and Rs 300,000 for each project above 20 MW. Participating companies need to meet both the financial and technical criteria.

Financial criteria: The net worth of a participating company should be equal to or greater than Rs 20 million. Companies that have been incorporated on or before April 2010 are required to submit financial reports of the last four financial years, whereas companies incorporated after April 2010 will have to submit the annual audited figures till the end of the 2013-14 financial year.

Technical criteria: It has been proposed that only commercially established and operational technologies will be promoted to minimise the technology risk and to achieve the timely commissioning of projects. Hence, crystalline silicon, thin film or concentrated photovoltaics (CPV) are being considered.

Domestic content requirements: To protect the interests of the domestic manufacturers of solar equipment, the draft guidelines propose that bids for projects amounting to a capacity of about 500 MW should include the mandated domestic content requirements (DCR). For companies using crystalline silicon technology, it is mandatory to procure both solar PV cells and modules that are manufactured in India. However, if thin film technology is used, the entire module assembly comprising thin-film solar cells should be manufactured in India, while the starting substrate and other requisite raw materials can be imported.

Selection or shortlisting of projects

After shortlisting the projects as per the qualification criteria, the project developers/bidders will be asked by NTPC to submit requests for proposal (RfP) bids indicating the discount in terms of paisa/kWh on the Central Electricity Regulatory Commission (CERC)-approved applicable tariff. Projects that offer the maximum discounts (in paisa/kWh) on the CERC approved applicable tariff will be selected first. Accordingly, a letter of intent (LoI) for all the selected projects will be issued.

In order to discourage adventurous bids, a bid bond on a graded scale should be furnished along with the RfP bid. The developer/bidder also needs to provide bank guarantees to NTPC in a phased manner. An earnest money deposit (EMD) of Rs 2 million/MW is to be submitted in the form of a guarantee, along with the RfP and a performance bank guarantee of Rs 3 million/MW has to be submitted at the time of signing the power purchase agreement (PPA).

Financial closure and the commissioning of projects

The developers or participating companies will have to report project financing arrangements within 210 days from the date of signing the power purchase agreement (PPA). They should also furnish the necessary documents to establish clear title and possession of the required land for the project’s development, and that the requisite technical criterion have been fulfilled.

A project should be commissioned within 13 months from the date of signing the PPA. However, in case of a delay in achieving the above conditions, NTPC will encash the performance bank guarantee and will remove the project from the list of selected projects.

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine