MNRE Issues Guidelines for DISCOMs Procuring Power from Decentralized Solar Projects

The solar power generator must pay PBG of ₹500,000/ MW within 30 days from the date of issue of Letter of Award


The Ministry of New and Renewable Energy (MNRE) has issued guidelines to develop decentralized solar power projects in the country.

“The draft guidelines were placed on the ministry’s website for stakeholder consultation. The suggestions received from different stakeholders have been suitably incorporated, and final guidelines are being issued herewith to facilitate the development of decentralized solar power projects in the country,” states the MNRE letter.

The new guidelines will apply to distribution companies (DISCOMs)  procuring solar power from decentralized solar power projects of capacity more than 2 MW connected to rural distribution sub-stations of 33/11 kV, 66/11 kV, and 110/11 kV.

Further, the new MNRE guidelines state that the bidder should submit a non-refundable processing fee of ₹10,000 (~$141.30)/ MW or part of the capacity applied along with the response of Request for Selection (RfS). The net-worth of the bidders should not be less than 20% of the estimated cost of the project. In the case of MSME and start-ups, the provisions as per the government policies will be applicable.

According to the draft proposal of the guidelines issued in September 2019, the net-worth of the bidders should not be less than ₹10 million (~$1.41 million)/MW.

In September, Mercom reported that the MNRE called for comments, suggestions, and opinions from stakeholders before October 11, 2019. The draft proposal stated that the DISCOMs will provide connectivity at the substation and will have to ensure ‘must-run’ status to the solar projects by keeping the feeders ‘On’ during the sunshine hours of the day.

As per the final guidelines, DISCOMs may also allow power trading agencies to act as intermediate procurers. These agencies will then float bids for setting up power projects and sell the power to DISCOMs or open access customers on mutually agreed trading margin not exceeding ₹0.07 (~$0.001)/ kWh.

Also, the solar power generator (SPG) must obtain necessary clearances as required for setting up the solar power project. However, the state government will facilitate time-bound clearances through a single-window clearance system for such projects.

The SPG will provide the Performance bank Guarantee (PBG) of ₹500,000 (~$7,065)/MW within 30 days from the date of issue of Letter of Award. In cases where the DISCOM provides land and evacuation facilities, the distribution company may prescribe a higher PBG amount.

Previously, it was reported that the Central Electricity Regulatory Commission (CERC) approved the new national average power purchase cost (APPC) of ₹3.60 (~$0.051)/kWh for open access for FY 2019-20.

Image credit: Dhamma Energy