The President of India has accorded his approval to implement phase-II of the Central Public Sector Undertaking (CPSU) program to set up 12,000 MW of grid-connected solar photovoltaic (PV) power projects for self-use or use by government entities.

The program was proposed by the Ministry of New & Renewable Energy (MNRE). Under this, the government producers will get four years: 2019-2020 to 2022-23, to set up 12,000 MW of solar power projects.

In February 2019, Cabinet Committee on Economic Affairs (CCEA) approved the proposal for the implementation of setting up 12 GW grid-connected solar PV under CPSU Phase-II program.

Key Highlights

• Government producers can either set up projects independently or through distribution companies (DISCOMs).
• Solar Energy Corporation of India (SECI) will be the implementing agency.
• The government producers will also get Viability Gap Funding (VGF) support of ₹85.80 billion (~$1.20 billion) for self-use or for use by the government or its entities, both at the central and state levels.
• The upper limit for the VGF provided to producers will be ₹7 million (~$0.1 million)/MW.
• Fifty percent of VGF amount will be released after the award of a contract to engineering procurement construction contractor, and the remaining 50 percent will be released upon the completion of the project.
• Domestically manufactured solar cells and modules are mandatory initially under this program. MNRE may in the future include wafers, ingots, and polysilicon manufactured in India to the list.
• Power produced will be either utilized by government producers or sold to other government entities directly or through DISCOMs on payment of mutually agreed usage charges.
• The usage charges should never exceed ₹3.50 (~$0.050)/kWh and will be exclusive of any other third-party charge such as wheeling, transmission charges and losses, and the like.
• Project commissioning timeline will be 18 months.
• If sufficient VGF amount is left after the development of 12 GW grid-connected solar PV projects, the capacity to be set up under this program will be increased.

The implementation of this program is expected to create an investment of ₹480 billion (~$6.70 billion) and provide direct employment to 60,000 people for about one year in pre-commissioning phase and 18,000 people for the next 25 years during the operation and maintenance period.

It also expected to boost domestic solar manufacturing by providing them with a set demand outlook for the next four years as the program makes it mandatory to use domestically manufactured solar photovoltaic cells and modules as per specifications and testing requirements set by the MNRE.