14 MW solar+42 MW storage project for Jammu & Kashmir approved with VGF support

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The scheme for Jammu & Kashmir would be implemented by the Solar Energy Corporation of India (SECI), which will also act as a consultant for the entire project, including finalization of the detailed project report, selection of the solar project developer, project management till project testing, commissioning and execution of the project by the project developer.

SECI will be responsible for fund management, that is, release of viability gap funding (VGF), and will also monitor the performances post commissioning of the projects. The estimated total central finance assistance (CFA) is Rs 187 crore, which includes VGF amount of Rs 182 crore and SECI’s project management consultancy (PMC) charges at 3% of total VGF disbursed. The entire CFA cost will be borne by the Ministry of New and Renewable Energy (MNRE).

The projects shall be implemented in developer mode (build-own-operate mode) at a fixed tariff of Rs 2 per unit.

Project developers will be selected through a process of open competitive reverse bidding on the VGF to make available generated solar power at the pre-fixed tariff of Rs 2.00 per unit. The selection of bids will be done by SECI based on the lowest VGF in the ascending order as quoted by the bidders during the auctioning, till the entire capacity is allocated.

The upper limit of VGF is Rs 13 crore for 1 MW solar PV project with battery storage of 3 MWh. SECI would ensure the total solar project capacity including required battery storage capacity at each location before the release of VGF amount to solar project developers. The VGF would be provided on deferred payment basis to ensure completion of projects as per given milestones.

The land for setting up of solar projects with battery storage will be facilitated by Ladakh Renewable Energy Development Agency (LREDA) and Kargil Renewable Energy Development Agency (KREDA) in their respective regions.

Power Development Department (PDD) of J&K State Government will sign a power purchase agreement (PPA) with the selected developer. The responsibility of getting connectivity with the transmission system owned by the Power Development Department will lie with the bidder.

The successful developer would also be responsible for operation and maintenance of the project.

VGF will be released in two tranches. Half of the VGF will be disbursed on achieving the first milestone of equipment supplies at the site for setting up of the solar plant with battery storage. The remaining half will be disbursed on successful commissioning of the full capacity of the solar plant.

SECI will obtain Bank Guarantee for 50% of the VGF amount, which will be reduced by 10% each year and fully returned in five years from the date of successful commissioning.

The selected project must be commissioned within 18 months of the award of order.