Bridge India

Weekly Update: India to invite bids for another 1,500 MW of solar PV under the NSM this year

BRIDGE TO INDIA understands that Ministry of New and Renewable Energy (MNRE) plans to allocate 1,500 MW of solar PV projects under the National Solar Mission (NSM) towards the end of this year. These new projects are likely to follow the bundling mechanism, similar to phase one of the NSM and unlike the Viability Gap Funding (VGF) mechanism used for the recent 750 MW of NSM projects, where Power Purchase Agreements (PPAs) have already been signed for 700 MW and another 50 MW PPAs should be signed soon with the waitlisted bidders. Apart from that, another 1,000 MW allocation is planned under the VGF mechanism for the next year.

  • The capacity allocation plan by central agencies under NSM will be back on track for phase two of the NSM
  • If states continue to provide new capacity, the target of 10 GW by 2017 for NSM will most likely by achieved despite failure of RPO mechanism
  • MNRE and CERC have revived their efforts to boost the REC market

As per the guidelines for phase two of the NSM (2012-2017), 2,320 MW of PV and 1,080 MW of CSP projects were to be allocated through the central agencies by March 2015 (refer). The remaining 5,600 MW of capacity out of the 9,000 MW target was expected to come up through state government initiatives and the Renewable Purchase Obligations (RPO) mechanism. However, with only 150 MW of CSP projects implemented to date, PV allocations for central agencies would need to go up to 3,250 MW. Now, with 750 MW of allocations already under way, 1,500 MW of new allocation by March 2015 and another 1,000 MW by March 2016, the capacity allocation plan by central agencies under the NSM will be back on track for phase two of the NSM.

Apart from these initiatives, there are plans to develop one 1,000 MW power project by public sector entities, four power projects of 500 MW each to be allocated to private developers and another 1,000 MW of projects on defense land. State allocations in Uttar Pradesh, Punjab, Rajasthan, Andhra Pradesh and Karnataka are expected to contribute significantly to new installed capacity in 2014-15. With 2.5 GW already installed, if the states are able to continue providing new capacity, the target of 10 GW by 2017 for the NSM will most likely be achieved with ease despite failure of the RPO mechanism.

Further, BRIDGE TO INDIA understands that the Central Electricity Regulatory Commission (CERC) has suggested necessary changes in the Electricity Act to ensure enforcement of RPOs.  MNRE and CERC have revived their efforts to boost the Renewable Energy Certificate (REC) market but there is no clarity on how and when any new measures will be announced.