Indian Government Gives Go-Ahead For 2 GW Solar Power Tender

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India’s Cabinet has given the go-ahead for the auction of 2 GW worth of solar power capacity under the National Solar Mission.

During a recent meeting of the Cabinet, where the government also gave a formal approval to the 100 GW installed solar power capacity target by 2022, it was decided that the auction of 2 GW under Batch 3 Phase 2 of the National Solar Mission would go ahead.

The 2 GW solar power capacity will be auctioned to project developers with Viability Gap Funding (VGF). Project developers will quote the minimum capital cost assistance they would require to set up their projects instead of minimum tariff. Of the 2 GW capacity to be auctioned, 250 MW capacity will have to be developed using only Indian-made solar cells and modules — the Domestic Content Requirement. Project developers will be free to use any cells and modules for the balance 1.75 GW capacity — Open Category. The maximum VGF granted to a project developer will be Rs 1.31 crore ($207,300) per MW in the Domestic Content Requirement category and Rs 1 crore ($157,500) per MW in the Open Category.

The government expects that the total investment for installation of the 2 GW capacity will be around Rs 12,000 crore ($1.9 billion). The Indian government has allocated Rs 2,100 crore ($330 million) to provide for the viability gap funding to the project developers.

Project developers will sell the electricity through long-term power purchase agreements at pre-defined tariffs. The tariff will be set at Rs 5.43 (¢8.55) per kWh for the first year, the tariff would then increase by Rs 0.05 (¢0.08) per kWh every year until it reaches Rs 6.43 (¢12.13) per kWh.

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