MNRE Issues New Tariff Guidelines

• MNRE has fixed the tariff for solar power procurement from PV project developers for Phase-II, Batch-IV of the JNNSM at a lower level
• Under the new guidelines, for states where the tariff has fallen below 4.50 INR per kWh ($0.07) in one or more major tenders, the tariff will be fixed at 4.00 INR per kWh ($0.06)
• For states where tariffs have remained over 4.50 INR per kWh in all major tenders, the tariff will be fixed at 4.50 INR per kWh

The Indian Ministry of New and Renewable Energy (MNRE) has fixed the tariff for solar power procurement from PV project developers for one of its support schemes at a lower level. For Phase-II, Batch-IV of the Jawaharlal Nehru National Solar Mission (JNNSM), the Cabinet had earlier this year approved to set up 5,000 MW of grid connected solar PV power projects under the so-called State Specific VGF Scheme.

For the above mentioned scheme, the ministry had set a pre-determined tariff of 5.00 INR per kWh ($0.07) or less. In a 'corrigendum' issued on August 30, 2016, the ministry has directed concerned departments to ensure that for states where the tariff has fallen below 4.50 INR per kWh ($0.07) in one or more major tenders, the tariff will be fixed at 4.00 INR per kWh ($0.06). Similarly, for states where the tariff has remained over 4.50 INR per kWh in all major tenders, the tariff will be fixed at 4.50 INR per kWh.

India has seen aggressive prices being quoted for solar power under the capacities auctioned by the Solar Energy Corporation of India (SECI) and national utility National Thermal Power Corporation (NTPC). In January 2016, Finnish company Fortum made history when it quoted and won 70 MW capacity auctioned by NTPC in a 420 MW project located in Bhadla Solar Park in Rajasthan for 4.34 INR per kWh ($0.06). Nonetheless, the ministry had fixed a tariff of 4.43 INR per kWh on all VGF projects handled by SECI. Developers can ask for subsidies of up to 10 million INR ($0.15 million) per MW for open category projects under VGF and 12.5 million INR ($0.19 million) for projects in the so-called Domestic Content Requirement (DCR) category.

To ensure developers are paid on time, SECI is also working to set up a Payment Security Fund worth $223.25 million for all VGF projects in Phase-II to JNNSM (see Payment Security Fund For India Projects). SECI will be distributing a capacity of 1,250 MW every year for the next four years as of fiscal year 2015-16 to exhaust the entire capacity of 5,000 MW.