The Cabinet Committee on Economic Affairs (CCEA), has approved the Ministry of New and Renewable Energy (MNRE)’s proposal to set up 12,000 Megawatts (MW) grid-connected solar photovoltaic (PV) power projects.
The project is a part of the Central Public Sector Undertaking (CPSU) Scheme Phase-ll and is financially supported by the government producers with Viability Gap Funding (VGF). Viability gap financing refers to grants that support projects that are economically justified but not financially viable.
The 12,000 MW capacity of grid-connected solar power projects will be set up by government producers over a four-year period, that is from 2019-2020 to 2022-23, as per the terms and conditions specified in Government Producer Scheme.
A press release said that the project will mandate the use of both solar photovoltaic (SPV) cells and modules manufactured domestically according to MNRE specifications and testing requirements.
This is expected to create an investment of IN ₹480 billion (approximately US $6.7 billion).
Photovoltaics (PV) is the direct method of converting sunlight into electricity through a solar cell. Several different solar cell technologies are available in India’s markets today. These include mono-crystalline and polycrystalline silicon, thin films such as amorphous silicon, cadmium telluride, copper indium gallium selenide, and concentrator-based high-efficiency III-V.
The project is also expected to boost the Make in India initiative by encouraging government producers to procure solar cells and modules from domestically, through local manufacturers.
It will create enough demand for the indigenous production of solar PV cells and modules for the next three or four years.
The release stated this scheme will provide direct employment to around 60,000 people for about a year in pre-commissioning activities and the construction phase. And around 18,000 people for about 25 years in the operation and maintenance period.
Additionally, it will offer more than 120,000 employment opportunities for local residents during the implementing stage of the solar power projects.
In December 2017, MNRE had released a concept note and planned to develop India’s manufacturing supply chain, including polysilicon, cells, and modules. MNRE introduced several subsidies and incentives including direct financial support of more than IN ₹110 billion (around US $1.7 billion) for manufacturers to expand and upgrade, 30 percent central financial assistance, cheaper loans, a customs duty exemption, and cheaper power.
This recently approved project marks the Ministry’s success in creating a market for domestic cells and modules manufacturers.
The tariff will apply to procurement from all solar PV projects of capacity 1 MW and above. The TNERC said that in most auctions in the country, although tariff rates differ in each state, the solar tariff has stayed around the IN ₹3 (about US $0.04)/kWh mark.
The state commission noted that a generalised tariff mechanism will provide incentives to the investors to use the most efficient equipment to maximise returns and for selecting the suitable site.