MNRE’s New Scheme Guidelines for 12,000 MW CPSU Phase-II Project

The ministry of new and renewable energy (MNRE) has released the newly amended scheme guidelines for implementation of Central Public Sector Undertaking (CPSU) Scheme Phase-II (Government Producer Scheme) for setting up 12,000 MW grid-connected Solar PV power projects by the Government Producers.

These 12,000 MW projects will be produced by the government producers with Viability Gap Funding (VGF) support for self-use or use by Government/ Government entities, either directly or through Distribution Companies (DISCOMs). 

The amendments declare that now the power produced by the government producers can be used on payment of mutually agreed usage charges of not more than Rs. 2.45/unit for self-use or use by government/ government entities, either directly or through DISCOMS. However earlier, the charges were not more than Rs. 2.80/unit. 

Under new guidelines, the maximum permissible VGF has been kept at Rs. 0.55 cr./MW, while earlier it was at Rs. 0.70 cr./MW. A VGF is provided to cover the cost difference between the domestic and imported solar cells and modules. The actual VGF is to be given to the government producer will be decided under a bidding process using the VGF amount as a bid parameter to select the project developer.

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According to the unchanged guidelines, the maximum permissible VGF amount will also be reviewed from time to time, by MNRE, and will be reduced by MNRE if the cost difference comes down. VGF will be released in two tranches as follows: 

• 50 percent will be given on the grant of a contract to the EPC contractor (including in-house EPC Division)
• Rest 50 percent will be given on successful commissioning of the full capacity of the project. 

The VGF provided under the Scheme can be used by the Government Producers as their equity in solar power projects being set up under this Scheme. 

The new timelines for project commissioning after amendments is a period of 30 months from the date of the letter of grant/award for the solar power projects under this scheme. However, to expedite the implementation of the Scheme and to give impetus to domestic solar PV manufacturing, a shorter timeline can also be specified by MNRE.

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While earlier there were two different timelines for commissioning, as Projects up to 500 MW to be commissioned within 24 months from the date of the letter of award. However, for the projects with more than 500 MW of capacity, 24 months period was given to commission up to 500 MW and the next six months would have been given to commission the rest of the capacity of the project.