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Indian Government Approves Support For Another 5 GW Solar Power Capacity

The Cabinet of Ministers of the Indian Government have approved funding facilitates for setting up solar power projects with 5 GW capacity.

The Indian Government will provide Rs 5,050 crore (US$750 million) through the Solar Energy Corporation of India (SECI) as viability gap funding to set up 5 GW of solar power projects. These projects will form part of the Batch IV of Phase II of the National Solar Mission that aims to have an operational solar power capacity of 100 GW by 2022.

This is the third such approval by the Indian Government to develop projects under the viability gap funding mode. Through this mode, the SECI will provide capital cost support to project developers up to Rs 1 crore (US$150,000) per MW of the project. The project developers shall bid for the lowest capital cost they require and will sign power purchase agreements at a rate set by SECI.

The latest funding approval comes for 5 GW capacity which will be auctioned off in sets of 1,250 MW capacity each over the next few years.

The Cabinet had approved funding of Rs 2,100 crore (US$315 million) in June las year to support the development of 2 GW solar power projects – Batch III, Phase II of the National Solar Mission. Of this 2 GW capacity, 250 MW is to be built using modules manufactured in India. The Ministry of New & Renewable Energy (MNRE) had initially proposed a tariff of Rs 5.43/kWh (US¢8.1/kWh) for these projects with an escalation of Rs 0.05/kWh (US¢0.075/kWh) per year for 20 years. However, following the recent trend of sharp decline in tariffs in competitive bidding, the Ministry recently slashed the tariff to Rs 4.43/kWh (US¢6.6/kWh) without any escalation.

The first auction of under viability gap funding saw allocation of 750 MW capacity – Batch I, Phase II of the National Solar Mission. A number of these projects have already been commissioned. The tariff for these projects is Rs 5.45/kWh (US¢8.1/kWh) for a period of 25 years.

In December 2014, the government also approved funding worth Rs 1,000 crore (US$150 million) for 1 GW capacity to be auctioned through the viability gap funding mode by public sector companies owned by the central government. This will form part of the Batch V of Phase II of the National Solar Mission and will be independent of the above 3 auctions.

 
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An avid follower of latest developments in the Indian renewable energy sector.

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