The President of India, Ram Nath Kovind, has granted his approval to the Government of India's plans to use viability gap funding (VGF) for 1 GW of grid connected PV power projects in the north eastern states, including Sikkim. This VGF will be a subset of the current 5 GW VGF scheme for grid connected PV projects of Batch-IV of Phase-II, Jawaharlal Nehru National Solar Mission (JNNSM).
As the implementing agency, the Solar Energy Corporation of India (SECI) will be responsible for conducting competitive rounds to set up 1 GW of solar projects on a build-own-operate (BOO) basis by solar power project developers in the north eastern states during financial year 2018-19. Tariffs have been capped at INR 3.00 ($0.042) per kWh with a maximum VGF of INR 10 million ($0.14 million) per MW.
Owing to land constraints in the hilly regions of the north east, minimum size of the project will be 5 MW. Project commissioning timeline is within 21 months from the date of signing power purchase agreements (PPAs).
VGF is a financing mechanism through which the Government of India auctions solar power projects using a competitive bidding process for developers to set up and sell power for a pre-determined tariff. The government offers financial support to the winners in the form of VGF.