MNRE Incentives Restricted to Rooftop Solar Systems Connected to the Grid

The rules to apply to all future tenders

February 25, 2021


The Ministry of New and Renewable Energy (MNRE) has issued amendments to the guidelines for the Phase II of the rooftop solar program. In the new guidelines, the Ministry has said that the implementing agency should assign a minimum of 10% of the total allocated quantity to the lowest bidder. If the vendor does not execute the allocated quantity, the bank guarantee will be encashed, and the vendor blacklisted for five years.

This new clause will be applicable for all future tenders and tenders which have already been floated, with the bid submission scheduled on or after March 06, 2021.

The Ministry clarified that only the grid-connected rooftop solar systems installed in the area of the DISCOM would be considered for the calculation of incentives. The projects that are not connected to the grid, generally called ‘behind-the-meter’ systems, will not be considered for incentives.

As per the amended guidelines, the incentives will be disbursed based on the applicable benchmark cost issued by MNRE for the capacity of above 10 kW up to 100 kW or the lowest cost discovered in the auctions for that state or union territory, whichever is lower.

MNRE had issued operational guidelines to implement the second phase of its grid-connected rooftop solar photovoltaic program in August 2019. Overall, 22 GW of rooftop solar PV projects are to be set up under the second phase of this program. The industry had sought clarifications on some of these guidelines.

In another amendment, the Ministry said that the participating government-owned or private distribution companies (DISCOMs) would be eligible for advance central financial assistance (CFA) up to 30% of the total CFA. The old clause specified that private DISCOMs would be eligible for advance CFA upon submitting a bank guarantee of an equivalent amount.

The Ministry has also specified that the benchmark cost applicable at the time of issuance of the letter of award (LoA) or the empanelment of vendors will be used to calculate CFA for the project completed within the sanctioned timeline. For projects completed during an extended timeline, CFA will be calculated based on 95% of the applicable benchmark cost or 95% of the tendered cost, whichever is lower. Under the existing clause, the benchmark cost at the time of commissioning of the project was used to calculate the CFA.

The DISCOMs should provide details of grid-connected rooftop solar systems installed behind the meter in the area separately. On receipt of the details, the incentive amount for respective DISCOMs will be calculated.  They will also need to provide information about their initiatives to promote rooftop solar in their areas.

In January last year, MNRE issued a clarification saying only manufacturers of solar panels and system integrators who fulfill the pre-determined technical and financial criteria would be eligible to participate in the bidding process under the second phase of its rooftop solar program.

Previously, Mercom reported that MNRE had said that the subsidy under the grid-connected rooftop solar program would be available to all eligible households for installation of rooftop solar as per the regulations of the respective State Electricity Regulatory Commission (SERC) and the program guidelines.