Guidelines Issued for Implementation of Off-Grid Solar Plants in RESCO Mode

MNRE has issued the final guidelines for the implementation of off-grid solar power packs/ plants in RESCO mode and model PPA.

In reference to its previous order issued in April 2020 for issuing extension of off-grid and decentralized solar PV applications programme –Phase III till March 31, 2021, the Ministry of New and Renewable Energy (MNRE) had mentioned that under the extended Scheme, off-grid solar power packs will be installed only in RESCO mode for which Ministry will be issuing separate Guidelines. And now, in continuation of the initial draft guidelines, the ministry has issued the final guidelines for the implementation of off-grid solar power packs/ plants in RESCO mode and model PPA.

Under the Phase III of Off-grid and Decentralized Solar PV Applications Programme of the MNRE, off-grid solar power plants of individual size up to 25 kWp can be installed in areas where grid power has not reached or is not reliable. Such plants are mainly aimed at providing electricity to Government schools, hostels, panchayats, police stations and other public service institutions.

The Scheme has been extended up to March 31, 2021, and is applicable only for the North-eastern States for installation of off-grid solar PV plants through RESCO mode with Central Financial Assistance (CFA) of 90 percent of the benchmark cost of the system. guidelines for implementation of Phase-III of Off-grid and Decentralized Solar PV Applications Programme were issued on August 7, 2018, and remain valid during the extended period of implementation.

One of the most key features of the off-grid solar PV system under the programme is that the plants would be eligible for central financial assistance (CFA), provided by MNRE, at 90 percent of the benchmark cost. This will reduce the financial burden to a significant level, which otherwise is very high in per-unit terms due to the smaller size of plants and investment in storage batteries.

Under CAPEX mode, off-grid solar power plants are guaranteed for 5 years by the vendors. However, Under the RESCO model the Ministry proposed that the vendor will install and operate the solar power plant of capacity up to 10 kWp for at least 10 years and solar PV plants of capacity above 10 kWp for at least 15 years. This will increase the guarantee period.

Also, MNRE benchmark cost covers the cost of the complete system, transportation of material at the site, installation, commissioning, insurance and AMC for 5 years, and CFA will be available on the benchmark cost.

Furthermore, the Tariff estimation has been done for the following two cases:

Case I: Where Subsidy is paid upfront – In this case, the levelised tariff discovered is Rs 5.96 per kWh.

Case II: Where 50 percent subsidy is paid upfront and balance 50 percent after completion of 5 years – In this case, the levelised tariff discovered is Rs 9.55 per kWh.

For the PPAs signed, in case the power producer fails to supply daily minimum guaranteed power (DMGP) or power required by the beneficiary, whichever is less, the developer will be liable to pay penalty for the units supplied less than the DMGP at a rate specified in the PPA. The penalty could be 2 times the rate at which power is supplied by the developer to the beneficiary.

On the timeline implementation, projects will be installed and commissioned by the successful RESCO within 3 months from placement of award by implementing agency.

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