Under NTPC’s Vidyut Vyapar Nigam Ltd (NVVN) scheme, there has to be a minimum capital investment of about Rs 750 million, at least 30 per cent of which has to come from the promoters’ equity contribution. Thus most small entrepreneurs will not be able to take part in this scheme. However, outside of NVVN scheme, it is possible for the small entrepreneurs to get incentivised for putting up under-5MW solar PV power plants through generation-based incentives provided by Ministry of New and Renewable Energy.

How to go about?
“Upfront requirement for investment into a solar grid plant is possession of land suited for solar application, clear power purchase agreement with the local or state electrical authority and required finance,” informs K. Subramanya, chief executive officer, Tata BP Solar.

The key building blocks of a grid-connected solar power plant include solar module (the power generating device), solar inverters (which convert the power produced into AC power) and power evacuation (which steps up the voltage to the specified kilovoltlevel and injects into the grid). Power evacuation structure is mostly a state power utility subject and requires minimal investment.

 [stextbox id=”info” caption=”Why it makes sense”]1. Annual solar radiation in India is 5.2-6.5 kWh/m2/day, and thus there is an abundant stock to trap
2. Ample land available for solar parks
3. Availability of government policies both at the national level (Jawaharlal Nehru National Solar Mission) and state level (Solar Power Policy in Gujarat, Karnataka and Rajasthan)
4. Attractive tariff rates, in the range of Rs 11-18 per kWh
5. Financial assistance from financial institutions and banks
6. Reduced customs duty followed by exempted excise duty on solar PV panels
7. Carbon credit benefits
8. Payback period of six to eight years
9. Project life of 25 years

—Deepak Zade, senior vice president (energy and carbon services),
MITCON Consultancy & Engineering Services[/stextbox]

“The project investor should choose the right engineering, procurement and construction (EPC) contractor who can skillfully design the solar power plant, supply the required components and also execute the project with good workmanship—ensuring useful life of 25 years, and undertaking operation and maintenance for at least 10 to 12 years if not 25 years,” says Subramanya.

“Solar module is the key building block, both technically (as it solely contributes to the energy production of the plant) and commercially (as it constitutes over 70 per cent of the project cost). So if the EPC contractor is an established solar panel manufacturer in the country with a good financial track record and credibility that suggests dependability over next 25 years, considerable de-risking is done from the point of view of the investor in terms of securing the returns,” he adds.

S.R.C. Sathyanarayan, head-PV power plants, TÜV Rheinland, lists out the financial, technical and other requirements as below:

Financial criteria. The net worth of the company should be equal to or greater than the value calculated at the rate of Rs 30 million or equivalent US$ per MW of the project capacity up to 20 MW. For every MW additional capacity, beyond 20 MW, additional net worth of Rs 20 million needs to be demonstrated. The net worth is computed on the basis of unconsolidated audited annual accounts of the company.

The company is required to submit annual audited accounts for the last four financial years (or starting from the year of incorporation if the period of existence of the company is less than four years), indicating the year which should be considered for evaluation, along with a net worth certificate fro a chartered accountant to demonstrate fulfillment of the criteria. However, fo new as well as existing companies, the net worth criteria can also be met as on date not more than seven days prior to the date of submission of request for selection (RfS) by the company.

For the purpose of meeting finacial requirements, only unconsolidated audited annual accounts of the company are used. However, consolidated accounts may be used provided the project developer has at least 26 per cent equity in each company whose accounts are merged in the audited consolidated account and the finanial capability of these companies is not considered again for the purpose of evaluation of the bid.

Technical criteria. Under Phase I of the JNNSM, it is proposed to promote only commercially established and operational technologies to minimise the technology risk and to achieve the commissioning of the projects. The detailed technical parameters for solar PV projects are shown in the box.


Connectivity with the grid. The plant should be designed for interconnection with the transmission network of the state transmission utility, central transmission utility or any other transmission utility at a voltage level of 33 kV or above. The project developer should indicate to the transmission-licencee the location (tehsil, village and district, as applicable) of the proposed project. In this regard, he needs to submit a letter from the transmission utility along with RfS confirming technical feasibility of the connectivity of the plant to the substation.

The responsibility of getting connectivity and open access to the transmission system owned by the transmission utility, as may be required, lies with the project developer. The transmission of power up to the point of interconnection where the metering is done is the responsibility of the solar power developer at his own cost. Interconnection with the Discom network may be accepted in exceptional cases where the Discom is the ultimate buyer of the entire quantity of power from that project; and NVVN has signed power sale agreement with that Discom and the Discom agrees to an agreed interconnection point and at an agreed voltage. This arrangement is subject to the arrangement of energy accounting with the state load dispatch centre.

The arrangement of connectivity can be made by the solar power developer through a dedicated transmission line which he may construct himself or get constructed by the state transmission utility, Discom or any other agency. The entire cost of transmission including the cost of construction of line, wheeling charges, losses, etc from the project up to the interconnection point are to be borne by the project developer and not reimbursed by NVVN or met by the state transmission utility or Discom. This connectivity can also be achieved through a shared line with any agency or any existing line of Discom or state transmission utility, provided the energy accounts are bifurcated and clearly demarcated for the power generated at the solar project and are issued by the state transmission utility or state load dispatch centre concerned.

 [stextbox id=”info” caption=”Requirements in a nutshell”]

1. Sound financial status of the Investor
2. Land suited for solar application (4 to 5 acres per MW)
3. Power purchase agreement (PPA) with the local/state electrical authority
4. Selection of technically proven and commercially viable technologies
5. Compliance with all formalities
6. Close supervision of project implementation and maintenance


The project developer may, however, shift the interconnection point closer to his project if 33kV substation comes closer to the project during the tenure of the PPA, provided that: (a) the interconnection is maintained at 33 kV or above and energy at the solar project is clearly demarcated for the power generated at the solar project and (b) energy accounts are issued by the state transmission utility or state load dispatch centre concerned. The costs associated with this arrangement, including the wheeling charges and losses up to the interconnect point, are also to be borne by the project developer.

Domestic content. One of the important objectives of the National Solar Mission is to promote domestic manufacturing. In view of this, the developers are expected to procure their project components from domestic manufacturers as much as possible. However, in the case of solar PV projects selected in the first batch during FY 2010-11, it was mandatory for projects based on crystalline silicon technology to use only the modules manufactured in India.

For solar PV projects to be selected in the second batch during FY 2011-12 too, it will be mandatory for all the projects to use cells and modules manufactured in India. PV modules made from thin-film technologies or concentrator PV cells may be sourced from any country, provided the technical qualification criterion is fully met.

Key to success
Effective planning, management and execution are the keys to success. Getting the project financed at a reasonable rate of 3-4 per cent is another step towards the project’s success.

The author is an executive editor at EFY



  1. Could someone please contact me on 0412 100 989 to discuss the options and viability of setting up a solar farm.

    thank you



Please enter your comment!
Please enter your name here