India has announced measures to provide financial support to solar power project developers even as the sector continues to see increasing competition in terms of tariff bids.
The Solar Energy Corporation of India (SECI) recently announced that it will set up Payment Security Fund for project developers who commissioned projects under the viability gap funding (VGF) schemes of the National Solar Mission. Under the VGF schemes, project developers do not bid for tariffs but for the lowest capital cost support required for setting up the projects.
SECI plans to set have a corpus of Rs 1,500 crore (US$220 million) in the Payment Security Fund. The corpus shall be used by the agency to cover against possible defaults in payment by power utilities and other buyers of solar power.
The first VGF scheme – phase II batch I – with 750 MW capacity has already been completed. Additional capacity under the scheme was announced when the current government came to power in May 2014. Phase II batch III and phase II batch IV plans capacity addition of 2 GW and 5 GW, respectively. Power generated from projects under these two batches will be sold at a fixed rate of Rs 4.43/kWh (US¢6.6/kWh) for a period of 25 years. The Indian government has approved funding support of Rs 7,150 crore (US$1.1 billion) for these 7 GW projects.
In addition to these schemes funding shall also be provided to projects that come up along the international border of India and Pakistan to enhance security and monitoring capabilities of the Border Security Force of India.
At any given point the fund shall have enough corpus to cover three months’ payment for all the VGF schemes.