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Scheme for Enhancement of capacity from 20,000 MW to 40,000 MW for Solar Parks and Ultra Mega Solar Power Projects

Solar parks

The enhanced capacity would ensure setting up of at least 50 solar parks each with a capacity of 500 MW and above in various parts of the country

Early this year in February, the Cabinet Committee on Economic Affairs, chaired by the PM Narendra Modi, approved the enhancement of capacity from 20,000 MW to 40,000 MW of the Scheme for Development of Solar Parks and Ultra Mega Solar Power Projects. The enhanced capacity would ensure setting up of at least 50 solar parks each with a capacity of 500 MW and above in various parts of the country. Smaller parks in Himalayan and other hilly States where contiguous land may be difficult to acquire in view of the difficult terrain, will also be considered under the scheme. The capacity of the solar park scheme has been enhanced after considering the demand for additional solar parks from the States.

The scheme aims to provide a huge impetus to solar energy generation by acting as a flagship demonstration facility to encourage project developers and investors, prompting additional projects of similar nature, triggering economies of scale for cost-reductions, technical improvements and achieving large scale reductions in GHG emissions. It would enable States to bring in significant investment from project developers, meet its Solar Renewable Purchase Obligation (RPO) mandate and provide employment opportunities to local population. The State will also reduce its carbon footprint by avoiding emissions equivalent to the solar park’s installed capacity and generation. Further, the State will also avoid procuring expensive fossil fuels to power conventional power plants.

MNRE has released sanction of the President of India for implementation of a Scheme for Enhancement of capacity from 20,000 MW to 40,000 MW for “Development of Solar Parks and Ultra Mega Solar Power Projects” for setting up of at least 50 solar parks each with a capacity of 500 MW and above by 2019-20; with an estimated Central Financial Assistance (CFA) of Rs 8100 crore.

Implementation Arrangements

Applicability: All the States and Union Territories are eligible for benefits under the scheme. States with good solar potential which have not yet submitted proposals would be encouraged for setting up of solar parks.

Implementation Agency: The solar parks will be developed in collaboration with the State Governments & their agencies. The Nodal Agency of Ministry of New and Renewable Energy (MNRE), Government of India (GOI) would be Solar Energy Corporation of India (SECI).

SECI will administer the scheme under the direction of MNRE and will also handle funds to be made available under the scheme on behalf of GOI. The States applying under the scheme will have to designate an agency for the development of solar park. Solar parks are envisaged to be developed following four modes as mentioned in the Scheme. The agency identified for the development of the solar parks shall be the termed as Solar Power Park Developer (SPPD). The choice of SPPD for developing and maintaining the park is left to the State Government.

Financial Model: SPPDs may raise funds as per the financial model given in the Scheme.

Projects of any solar technology may come up in the solar park. The flexibility in choosing technology will lie with the Solar Project Developers (SPDs) to ensure adoption of cost effective and state-of-the-art technology which is commensurate with the dynamic requirements of the project.

Power Purchase Agreement- The SPDs within the solar park shall enter into Power Purchase Agreement(s) (PPAs) with Central Utilities/State Utilities/Discoms/Third Parties/Captive Users who are willing to buy power from the developer(s). The tariff for the sale of power through PPAs could be either based on the tariff determined by Central Electricity Regulatory Commission (CERC)/State Electricity Regulatory Commission (SERC) or as determined through bidding process. The solar projects may come up under any schemes/programmes of the Central/State/UT Government or can be for third party sale, captive use or merchant sale.

Fund for power evacuation- The power evacuation arrangement will consist of two parts i.e. pooling stations and network within Park to collect power from each project and transmitting it to the transmission sub-station at the park boundary as the first part and the transmission sub-station along with the transmission line up to the existing grid of Central Transmission Utility (CTU)/State Transmission Utility (STU) as the second part. The SPPD would be responsible for the first part and the CTU/STU would be responsible for the second part. For both these parts i.e. entire evacuation arrangement, MNRE grant may be used. Loan from multilateral/bilateral agencies may also be used as a component to fund the power evacuation infrastructure by the SPPDs and CTU/STU. If the capital expenditure for the external power evacuation network is high, then a separate proposal may also be considered for funding from National Clean Energy Fund (NCEF), Green Corridor Programme or any other source.

Central Financial Assistance (CFA)

  • CFA at Rs. 25.00 lakh (Rs. Twenty Five Lakh) per solar park would be released by MNRE to SEC I for preparation of DPR of the Solar Park, conducting surveys, etc.
  • Beside above, CFA of up to Rs.20.00 lakh (Rs. Twenty Lakh only) per MW or 30% of the project cost, including Grid-connectivity cost, whichever is lower, would be released on achieving the milestones given under para 7 of the Scheme. The distribution of eligible grant between the SPPD for works within the park and CTU/STU for works outside the park would be as decided by MNRE. For release of requisite funds, the State Government will send a formal proposal to MNRE.
  • For administering the scheme and management of fund, SECI will be entitled a management fee at 1% of the grant released.
  • If the park is developed in phases, grant will accordingly be phased out in proportion to the expenditure in each phase.

MNRE notes that if there is need for any amendment to this Scheme for better implementation or any relaxation is required in the norms for Solar Parks due to operational problems, MNRE will be competent to make such amendments with the approval of Minister-in-charge.

The funds for implementation of the above scheme would be met from Demand No.69- Ministry of New & Renewable Energy; Major Head 281 0-New & Renewable Energy, Minor Head: Grid Interactive & Distributed Renewable Power, Sub Head 01- Grid Interactive Renewable Power; 04-Solar Power, 01 .04.35- Grants for Creation of Capital Assets during the year 2016-17 (plan) and onwards. This sanction issues in exercise of powers delegated to the Ministry and concurrence of IFD vide their Dy. No. 2163 dated 8.3.2017 and with the approval of competent authority on 20.3.201 7.

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