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Solar Mission Phase II tariff fixed at Rs 5.45 a unit

According to reports, the Ministry of New and Renewable Energy proposes to fix a tariff of Rs 5.45 per kWhr for solar power projects that would be awarded under the Phase II of the National Solar Mission, according to ‘Draft Guidelines’ released by the Ministry today.

Those who want to put up solar power projects will now be asked for bid for ‘viability gap funding’ that would be given by the Government.

The Government intends to provide viability gap funding for 750 MW of capacity.

The selected developers will now work backwards and determine how much of funding they would require from the government in order that they could sell electricity at Rs 5.45 a unit. (For those who wish to avail themselves of the ‘accelerated depreciation’ benefit, the tariff will be Rs 4.95 a unit.)

Those who bid for the least VGF will be selected for signing the power purchase agreement with government-owned Solar Energy Corporation of India.

SECI will in turn sell the solar power to the various state electricity distribution companies at Rs 5.50 a kWhr, keeping 5 paise per unit as trading margin for itself. The discoms are obligated to buy solar power (or, solar Renewable Energy Certificates in lieu of solar power), and hence they are expected to buy from SECI.

The upper limit for VGF is 30 per cent of project cost or Rs 2.5 crore per MW of capacity, whichever is lower. The developer will also demonstrate his commitment to the project by bringing in “his own equity” of Rs 1.5 crore per MW.

The VGF will be released in a phased manner, based on milestones achieved in the execution of the project.

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