MNRE had earlier released the draft guidelines for the allocation of projects using the VGF mechanism under the first batch of JNNSM Phase 2. Most of the clauses remain the same (refer our earlier post here). The major changes are on the VGF disbursal guidelines and clarity on the domestic content requirements. The details of the revised draft guidelines are given below
- Tariff – Rs. 5.45 per kWh for 25 years or Rs. 4.95 per kWh (with AD benefit) remains the same
- Upper limit of VGF – remains at 30% (up to a maximum of Rs. 2.5 crores per MW) whichever is lower
- Equity contribution – remains the same at least Rs. 1.5 crores per MW
- Timeline for VGF disbursal – this has been revised from the previous draft. The VGF would be released in three tranches as given below:
- 50 % on successful commissioning of the full capacity
- Balance 50 % progressively over next 5 years subject to plant meeting generation requirements (CUF within specified range) as under:
- Upon Commissioning (COD) – 50%;
- End of 1st Year from COD – 10%;
- End of 2nd Year from COD – 10%;
- End of 3rd Year from COD – 10%;
- End of 4th Year from COD – 10%;
- End of 5th Year from COD – 10%;
- Failure to generate power – If the project fails to generate any power continuously for 1 year within 25 years or its assets are sold or the project is dismantled during this tenure, SECI will have a right to claim on assets equal to the value of VGF released, on pro-rata basis. The value which can be claimed by SECI stands at 100% of the VGF during the first five years of operation and then drops by about 10% every subsequent year for the first 12 years of operation. The claim then decreases per year and ends at about 1% at the end of plant life (25 years).
- Interestingly, the project can be transfered to another party after one year of operations i.e. the developer has a lock-in period of one year before he can transfer the asset to another party.
- Domestic Content Requirements (DCR) – of the 750 MW available for allocation, 375 MW has been allocated to bidding with DCR. Under DCR, the solar power plant would have to use solar cells and modules manufactured in India.
- Traditional reverse bidding guidelines will remain for project allocation purposes.
As can be seen, there have been no major changes but some things such as the domestic content requirement guidelines have been clarified including how much capacity would be exactly available under the domestic content requirement guidelines.
The revised guidelines can be accessed here.
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