Performance-Based Financial Mechanism for MNRE’s CST Scheme: GERMI

A new study has found that MNRE’s off-grid and decentralised CST scheme should have a performance-based financial support mechanism

A new study has found that the Ministry of New and Renewable Energy’s (MNRE’s) off-grid and decentralised concentrated solar thermal (CST) scheme should have a performance-based financial support mechanism instead of the capital subsidy that was being provided earlier by the ministry.

The ministry had announced this scheme in 2014, aimed at promoting the use of CST technology for reducing dependence on fossil fuels for thermal applications such as community cooking, process heating, cooling, and drying. The programme was extended to 2019-20 for the promotion of the application of solar thermal.

MNRE in a notice has now requested stakeholders for their comments on the findings of the report by the Gujarat Energy Research and Management Institute (GERMI). The third-party evaluation was aimed at findings on how to revise the programme. The deadline for receiving comments from stakeholders is September 21, 2020.

The study has proposed that financial assistance should be provided over a period of five years after the commissioning of the project. And said that in order to avail the financial assistance, performance measurement instruments should be installed in the CST plant with an online monitoring system.

“Financial assistance for the first three years will be allocated to the beneficiary and the fourth and fifth-year assistance shall be allocated to the supplier,” the ministry said quoting the report. It said that the previous CFA allocation method took a long approval process, which many suppliers reported was a long process resulting in the distrust of the beneficiary.

The report added that the financial assistance to the supplier might be considered as a necessary aid for the operational and maintenance cost for that plant, which would reduce the financial investment by the beneficiary for operation and management of the plant. However, it said that in all cases, till the final Assistance, data should be submitted by the beneficiary to MNRE.

According to the GERMI report, the previous financial assistance model was linked to an ‘area of CST’, and it had no control over project quality and performance. It added that there was no penalty on the non-functioning of CST projects in the previous scheme.