Comments and suggestions submitted by NSEFI on draft Draft Guidelines for Selection of 3000 MW Grid connected Solar PV Power Projects under Batch-II Tranche-I State Specific Scheme

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NSEFI has submitted its comments & suggestions on the draft Draft Guidelines for Selection of 3000 MW Grid connected Solar PV Power Projects under Batch-II Tranche-I State Specific Scheme. As per NSEFI Chairman Mr. Pranab Mehta and Dir. Gen. Mr. Deepak Gupta, Government should focus not only on large size project but also on comparatively small size projects. The present guideline talks about the minimum capacity of 50 MW solar Power plants in the Andhra-Pradesh. It is suggested that minimum capacity should reduced to at least 10 MW. The draft guideline also suggests the domestic content requirement of 250 MW capacity of 1000 MW. This domestic content can be spitted among domestic module manufacturers using their own cell (made in India) and manufacturers using imported cells. Detailed submitted comments are as follows:

Section Description and Comments
2.1 “Solar Power Developers SPDs) shall enter into Implementation Support Agreement with JV Company for land & associated infrastructure. The connectivity shall be provided by STU (APTRANSCO)/CTU (PGCIL) with the provision of the STU/CTU pooling substation for the solar park”
  The draft does not specify exactly how much will the project developers will have to pay for land, evacuation infrastructure and other services. This absolute information is required by project developers for determining the cost of the project and therefore determine the bid tariffs. NSEFI requests MNRE to give more detail on:

  • Cost of land
  • Cost of transmission proposed by APTRANSCO, including itemized cost of construction of line, construction of bay, etc.
  • Cost of other services provided by the solar park developer.
  • Other costs, if any
3.7 “For bidding process Applicable Tariff quoted with AD/without AD shall be treated at par.”
  This clause will not be favourable for many project developers. Project developers who can claim accelerated depreciation tax benefits will unjustifiably stand at an advantage and many serious solar-focused companies who cannot claim such benefits will be at a disadvantage. This arrangement is against the spirit of fair competition. Therefore, we request you to revise this clause. Please treat both the types of project developers separately during bidding.
3.5 D “Out of the total capacity of 1000 MW under Phase-II Batch-II Tranche-I Part-I, a capacity of 250 MW will be kept for bidding with Domestic Content Requirement (DCR). Under DCR, the solar cells and modules used in the solar PV power plants must both be made in India.”
  Some of our members opine that definition of ‘Domestic Content Requirement’ by the government bodies including MNRE has changed abruptly. Earlier, photovoltaic modules, even the ones using photovoltaic cells not made in India, were considered under this category. Now, the cells which have been manufactured in India should be used for modules made in India to qualify for this category.NSEFI urges MNRE divide this 250 MW further into two – one for modules AND cells made in India, and other one for modules OR cells made in India. This will keep the domestic module manufacturers using foreign cells to qualify for Domestic Content Requirement. We suggest a 50-50 split for these two categories.
3.9 “The Project Developer shall provide the following Bank Guarantees to NVVN in a phased manner as follows:

  • Earnest Money Deposit (EMD) of Rs. 20 Lakh/MW in the form of Bank Guarantee along with RfS.
  • Performance Bank Guarantee of Rs. 30 Lakh/MW at the time of signing of PPA.”
  NSEFI urges MNRE to lower the Bank Guarantee deposits to be submitted by the project developers for EMD and PBG, etc. The amount should be in-line with SECI guidelines.
3.1 “Given the requirement to connect the project to the transmission utility substations at 132kV and above, the Project capacity shall be 50 MW.”
  NSEFI urges MNRE to lower the minimum project size from proposed 50 MW to 10 MW. Proposed minimum capacity of 50 MW will make solar parks out of reach of many serious project developers, and this will hamper healthy and fair competition. There could be 100 units in the solar park each comprising of 100MW capacity.
3.4 “The total capacity of Solar PV Projects to be allocated to a Company including its Parent, Affiliate or Ultimate Parent-or any Group Company shall be limited to 250 MW.”
  NSEFI urges MNRE to limit the total capacity allocated to a company including parent, affiliate or group companies to 100 MW. This should give space and opportunity to many developers. At best this could increased to 150 MW.
3.17 “Commissioning of the project: 13 months from the date of signing of PPA”
  With project size too large (50MW+), the time period to commission project should be increased to 24 months. Our recommendations are based on time period suggested in the Rajasthan Solar Policy 2014.
3.5 C (ii) “The arrangement of connectivity can be made by the SPD through a dedicated transmission line / Underground cable which the SPD may construct himself or get constructed by STU or Discom or any other agency. The entire cost of transmission including cost of construction of line, wheeling charges, losses etc. from the project up to the interconnection point will be borne by the Project Developer and will not be reimbursed by NVVN or met by the STU/Discom.”
  The above conflicts with the clause 2.1:“The connectivity shall be provided by STU (APTRANSCO)/CTU (PGCIL) with the provision of the STU/CTU pooling substation for the solar park. The SPD shall enter into connectivity and transmission service agreement with the STU/CTU for power evacuation through STU/CTU system.”

The issue related to connectivity to the sub-station should be clarified.
MNRE recommends that the connectivity and evacuation should be the responsibility of the solar park developer from the individual units or from the pooling station. By doing so, the solar park developer will carry out its responsibility to provide infrastructure to solar project developers; a uniform infrastructure will ensure better planning for capacity addition as well.

 

NSEFI suggests that solar park developer should release connectivity plan and commit to service level agreements for implementation of these plans through a written report issued to the winning project developers. Such connectivity plan will be required during financial closure.

 

NSEFI also suggests that any delays in connectivity should be responsibility of the solar park developer. There should be an absolute time commitment from the solar park developer to provide connectivity. If solar park developer fails to provide connectivity in additional 1 month time period after applying for connectivity and testing, there should be a provision of compensating the project developer through ‘deemed electricity generation’ mechanism.

3.12 “At this stage, the Project Developer would also furnish the necessary documents to establish possession in the name of the Project Developer of the required land/lease agreement with JV Company developing Solar Park for project development (minimum 2 ha per MW)”
  The project developer should be allocated land within 30 days of signing the power purchase agreement so as to ensure timely financial closure. If the land is not allocated in this time period, financial closure and project commissioning or any other subsequent deadlines should be adjusted with the number of additional days it took to allocate land, over and above 30 days of signing the PPA.
3.5 C (i) “The Project Developer shall submit a letter from the APTRANSCO along with RfS confirming technical feasibility of connectivity of plant to pooling substation and Discoms willingness to purchase of power”
  NVVN is the PPA signing authority, so it should take care of discom’s willingness to purchase power, as mentioned in clause 2.3:“NVVN will purchase the power from the successful developers at their bid tariff and sell bundled power (1000 MW Solar Capacity to be bundled with unallocated 500 MW Power from NTPC Coal Station allocated by MoP) to AP Distribution Companies after adding Trading Margin and other incidental expenses.”Because the projects are developed in a shared facility – solar park, feasibility confirmation should not be required and solar park developer must already ensure this while developing the park. NSEFI suggests
3.9 “SPD shall give Performance Guarantee Deposit (PGD) of Rs. 20 Lacs/MW in the account of NVVN at the time of commissioning of the project and the same shall be refunded to SPD without interest after expiry date of PPA including extension period of 15 years after satisfactory performance of the project. In case of the breach of contract by the developer or non-extension of PPA for further 15 years with NVVN, the above deposit shall be forfeited by NVVN.”
  The PGD will remain with NVVN for 40 years – an impractical time period. It may be suggested that PGD should be released in tranches after the 10th year based on plant performance.

Also, ‘satisfactory performance’ is not defined clearly. What efficiency levels to expect after 25 years?

3.13.1 “Part commissioning of the Project shall be accepted by NVVN subject to the condition that the minimum capacity for acceptance of first part commissioning shall be 50% of Project Capacity subject to balance Project Capacity thereafter.”
  The minimum capacity for part commissioning should be lower than 50% (min. 25MW in one go would create pressure on all the parties involved.
3.13.2 “The Project shall be commissioned within 13 months from the date of signing of PPA. In case of failure to achieve this milestone, NVVN shall encash the Performance Guarantee in the following manner”
  Delays on behalf of the solar park developer are not clarified upon. The risk related to solar park development should be borne by the solar park developer.
3.17 “Submission of Applications with documents for Registration: zero + 45 days”
  Time period for RfS submission should be increased to at least 60 days.

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