India energy ministry advances funding timeline for 1GW of solar from state-owned corporations

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India’s energy ministry has amended its invitation for state-owned corporations (CPSUs) to set up 1GW of solar PV plants across India, by bringing forward its funding timelines.

The Ministry of New and Renewable Energy (MNRE) releases its Viability Gap Funding (VGF), which supports the CPSUs in setting up these solar projects, in two tranches.

Originally, half the VGF was to be handed over to the project developer on successful commissioning of the entire project. The rest would be provided after one year of operation.

Now the payments will be brought forward, with 50% to be handed over at the Letter of Interest (LoI) juncture and at the start of installation work on the plant. The second half will be given at the commissioning stage.

Bridge to India consultant Mudit Jain told PV Tech that funding later in the project timeline is “always a risk”, as there can be further delays in the payment processes. However if 50% of the VGF comes right at the start of the LoI, it helps the cash flow processes of the developer.

Jain added: “The project costs are high. VGF coming right at the beginning of the project […] will definitely have an impact on the project execution timeline and of course the decision making will be much faster with the money coming upfront.”

The MNRE made the amendment in response to requests from various CPSUs and government organisations including the National Thermal Power Corporation (NTPC) and the Railways for an advance release of the VGF.

NTPC recently tendered for 400MW of solar projects in Telangana – one of several large tenders from the power corporation. Meanwhile the Indian Railways have been earmarked to set up large-scale plants on surplus land as well as setting up various projects for panels on top of train carriages.

Farmers

In related news, MNRE also released a document stating that the solar scheme for unemployed youths and farmers is still under a formulation stage.

Jain said the target for this unemployed youths and farmers scheme was recently reduced from the original 20GW to 10GW.

As of the latest state auction in Telangana in August, the 60GW ground-mount target for India’s overall 100GW target will be made up of:

  • 10GW – Scheme for decentralized generation of solar energy projects by unemployed youths and farmers
  • 10GW – PSUs
  • 5GW – Large private sector/IPPs
  • 5GW – SECI
  • 20GW – Under state policies
  • 10GW – Ongoing programmes including past achievements
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