MNRE Amends Guidelines for Solar Viability Gap Funding Program

September 12, 2017


The Ministry of New and Renewable Energy (MNRE) has amended the guideline for implementation of the Viability Gap Funding (VGF) program for solar under the National Solar Mission (NSM) Phase-II Batch-IV. Under this batch installations of over 5 GW of solar is targeted.

The MNRE has stated, “In order to facilitate the smooth implementation of the program, an empowered committee under the chairmanship of either the additional secretary or joint secretary, MNRE, will be constituted by MNRE.”

In its amendment, the MNRE also stated, “The empowered committee will address the issues and difficulties that have emerged under the 750 MW, 2,000 MW and 5,000 MW programs, and provide recommendations.”

According to Mercom’s Q2 2017 India Solar Quarterly Market Update, under NSM Phase-II, Batch 4, tenders for 3,650 MW of projects have already been issued, As of Q2 2017, auction results have been announced for 1,720 MW and 970 MW of projects have signed PPAs.

Recently, the Solar Energy Corporation of India (SECI) cancelled solar tenders aggregating 1,000 MW. The cancelled tenders include 500 MW of solar projects under the Open category and 150 MW of solar under the DCR category at the Kadapa Solar Park Tranche-IV, which was originally announced on June 20, 2016.

The MNRE had also amended the guidelines for the VGF program in June 2017. Then, the MNRE stated, “The Solar Energy Corporation of India (SECI) will tie up with buying entities and/or states for the entire capacity to be tendered, before the issue of request for selection (RfS).”

Solar tender and auction activity in India has been declining gradually. In August, solar auctions fell precipitously in India. Compared to the robust auction activity in June, solar auctions  fell by 95 percent in August with only 76 MW.

“Many of the MNRE programs – including VGF – are experiencing challenges as most of these were setup years ago and have not evolved to reflect current market conditions, including rapidly declining tariffs, the WTO DCR mandate, and the anti-dumping case,” said Priya Sanjay, Managing Director of Mercom India.

Image Credit: Mahindra Susten