Public Sector Units to Develop 12 GW of Solar Projects in 4 Years Using Domestic Modules

Viability Gap Funding support of ₹85.80 billion to be provided to these projects


The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal for the implementation of setting up 12,000 MW of grid-connected solar PV power projects under the Central Public Sector Undertaking (CPSU) Phase-ll program by government producers.

The program was proposed by the Ministry of New & Renewable Energy (MNRE). Under this, the government producers will get four years: 2019-2020 to 2022-23, to set up 12,000 MW of solar power projects.

The government producers will also get Viability Gap Funding (VGF) support of ₹85.80 billion (~$1.20 billion) for self-use or for use by the government or government entities, both central and state governments.

The program makes it mandatory to use domestically manufactured solar photovoltaic cells and modules as per specifications and testing requirements fixed by the MNRE.

This is expected to create an investment of ₹480 billion (~$6.70 billion) and provide direct employment to 60,000 persons for about one year in pre-commissioning phase and 18,000 persons for the next 25 years during the operation and maintenance period.

“More than 1,20,000 additional employment opportunities will be created for the local population by way of involvement in setting up of solar power projects and also in manufacturing of domestically produced cells and modules”, the government’s press release said.

In September 2016, the World Trade Organization had rejected India’s appeal against Domestic Content Requirements (DCR) for manufacturing solar cells and modules and agreed that India’s localization rules discriminate against U.S. manufacturers. The case against India was originally filed in 2013, following the announcement of DCR in Jawaharlal Nehru National Solar Mission Phase II policy and after India decided to file an anti-dumping case against the U.S., China, Malaysia and Taiwan.

According to the WTO regulations and the decision made by the United States and India, the DCR category ended on December 14, 2017. Ever since, India was mulling a program for CPSUs to utilize solar PV to fulfill their own energy requirements. In August 2017, MNRE had proposed developing 7.5 GW of solar by 2022 using domestically manufactured solar cells and modules during the second phase of its CPSU program – an extension to an earlier JNNSM program.

In December 2017, MNRE had released a concept note proposing to build out India’s manufacturing supply chain, including polysilicon, wafers/ingots, cells and modules. MNRE proposed a slew of subsidies and incentives including direct financial support of more than ₹110 billion (~$1.7 billion) for manufacturers to expand and upgrade, a 12 GW CPSU DCR program, 30 percent central financial assistance, cheaper loans, a custom duty exemption, and cheaper power. The capacity of 12 GW that has now been approved showcases MNRE’s success in providing market for domestic cells and modules manufacturers.

Recently, Mercom reported that 1 GW of solar projects will be developed in northeastern states under MNRE’s VGF program. Under the program, bidding would be conducted by SECI with a ceiling tariff of ₹3.0 (~$0.042)/kWh, with a maximum VGF of ₹10 million (~$0.14 million)/ MW.

In December 2018, MNRE amended the guidelines for the implementation of its program under which the government aims to develop 2 GW of solar PV projects with VGF as part of the third batch of the National Solar Mission Phase-II.

The MNRE has also amended the guidelines for the implementation of VGF program a few times.  In June 2018, MNRE amended the guidelines for the implementation of the VGF program for solar PV projects under NSM Phase-II.

In the same year, the MNRE also amended, for the fourth time, the VGF guidelines to develop 5 GW of solar projects with VGF under the fourth batch of the NSM Phase-II.