National Solar Mission: Brighter days ahead?

After successfully implementing phase I of the Jawaharlal Nehru National Solar Mission the Ministry of New and Renewable Energy (MNRE) has issued guidelines in connection with batch I of phase II. This batch is to set up a total capacity of 750 megawatts.

Unlike phase I where the bundling scheme and generation-based incentive schemes were used as incentives to set up solar projects, a viability gap funding (VGF) scheme has been proposed for batch I of phase II. It is proposed that the developer will be paid a fixed tariff during the term of the power purchase agreement (PPA) with Solar Energy Corporation of India (SECI), and will additionally receive VGF, to be implemented by SECI.

The bids for batch I of phase II were delayed twice due to concerns of industry participants on provisions of the guidelines, the draft PPA and the draft VGF securitization agreement (VGFSA). However the mission now seems to be on track as companies have bid for 2,170 MW of solar power capacity, almost three times the proposed 750 MW.

While MNRE and SECI have amended the draft PPA and VGFSA, and from time to time have issued clarifications, certain issues stemming from the documentary framework remain.

Neeraj Menon is a counsel at Trilegal and Shashank Jain is a senior associate. Trilegal is a full-service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad.