MNRE Releases Draft Guidelines for Off-Grid Solar Plants; Seeks Stakeholders Comments

The Ministry of New and Renewable Energy (MNRE) has released the draft guidelines for implementation of off-grid solar power packs under RESCO mode and model PPA. Also, the notice calls upon industry stakeholders to provide their suggestions and comments on the draft guidelines and draft PPA latest by May 25, 2020.

This is in line with the Ministry’s earlier order issued, on April 24, 2020, for the extension of Off-grid and decentralized solar photovoltaic (PV) applications programme – phase-III till March 31, 2021. In this order, it was also mentioned that under the extended scheme, off-grid solar power packs will be installed only under RESCO mode for which Ministry will be issuing separate guidelines.

According to the guidelines for off-grid and decentralized solar PV applications programme phase-III dated August 7, 2018, off-grid solar power plants up to 25 kWp capacity can be installed in areas where grid power has not reached or is not reliable, such plants are mainly aimed at providing electricity to schools, hostels, panchayats, police stations and other public service institutions.

Due to the intended beneficiaries for off-grid solar power plants are public service institutions, MNRE said that there could be difficulty in arranging the beneficiary share in an upfront manner.

Also, after guarantee period is over, continuing of operation & maintenance (O&M) of the plant can be an issue due to fund and technical constraints of the beneficiary, it added.

With an aim to effectively utilise the costly assets of the solar PV system, the Ministry decided that such system should be operated through RESCO mode, and these guidelines will provide implementation framework for the operation of off-grid solar PV systems via RESCO mode.

One of the most important salient 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 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% subsidy is paid upfront and balance 50% 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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