NVVN Guidelines for Batch II Phase I Solar Projects

NVVN has recently come out with the new guidelines for the Batch II Phase I of JNNSM solar projects. The expected changes were announced by Shri Deepak Gupta during the inauguration session of the 5th Renewable Energy Expo in New Delhi in mid August 2011. Sharing an article written by me in Energetica India, a power magazine: http://www.energetica-india.net/magazine/view/september-october-2011/#/26/

Summary of Guidelines for Selection of Solar PV Projects Process 1. NVVN will invite project developers to participate in the Request for Selection (RfS) for development of Solar Photovoltaic Projects under this scheme. The Project Developer will need to submit the RfS within 30 days of the invitation by NVVN. 2. The Project Developer will also need to submit non-refundable processing fee of Rs. 1 Lakh for each Project along with the RfS. Capacity 1. The project capacity will be atleast 5MW in case of Solar PV Projects and the maximum capacity of the Project will be up to 20 MW. The plant capacity to remain in multiples of 5 MW. 2. The total capacity of Solar PV Projects to be allocated to a Company including its Parent, Affiliate or Ultimate Parent-or any Group Company will be limited to 50 MW. Capacities under other schemes or phases are not to be counted. Financial Criteria 1. The Net Worth of the company should be equal to or greater than the value calculated at the rate of Rs 3 Crore per MW of the project capacity upto 20 MW. 2. For every MW additional capacity, beyond 20 MW, the net worth criteria will require additional net worth of Rs. 2 Crore per MW. Technical Criteria 1. The plant should be designed for inter-connection with the transmission network of STU/CTU or any other transmission utility at voltage level of 33 kV or above. 2. The responsibility of getting connectivity and open access with the transmission system owned by Transmission Utility will lie with the Project Developer. The transmission of power up to the point of interconnection where the metering is done will be the responsibility of the developer at his own cost.

Domestic Content 1. 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 far as possible. For Solar PV Projects to be selected in second batch during FY 2011-12, 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. Project Shorlisting 1. NVVN will evaluate the Projects for short listing based on financial, technical and other listed qualification criteria. In the event, the total aggregate capacity of the Solar PV Projects short-listed is up to 350 MW; all the short-listed Projects would be selected and Letter of Intent (LoI) will be issued to all the short-listed Projects. 2. In the event, the total aggregate capacity of the Solar PV Projects short-listed by NVVN is higher than 350 MW, the final selection of the Projects will be done on the basis of discount to be offered by Project Developers on CERC Approved Tariff as applicable on the date of submission of bids. The Projects offering the maximum discount in Rs/kWh on the CERC Approved Applicable Tariff would be selected first and so on. In order to discourage adventurous bids, Bid Bond on graded scale would need to be furnished along with the RfP bid in.

Discount offered on CERC Approved Tariff Upto 10% or 10% More than 10% & Upto 15% More than 15% & Upto 20% More than 20% & Upto 25% More than 25% Bank Guarantees

Amount of Bid Bond applicable for every paise of discount on CERC Approved Tariff (per MW) Rs.10,000/Rs.20,000/Rs.30,000/Rs.40,000/Rs.50,000/-

1. The Project Developer will 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.

 Bid Bond in the form of Bank Guarantee along with RfP bid (as applicable) Performance Bank Guarantee of Rs. 30 Lakh/MW at the time of PPA signing. In case, NVVN offers to execute the PPA with the Project Developer and if the Project Developer refuses to execute the PPA within the stipulated time period, the Bank Guarantees towards EMD and Bid Bond will be encashed by NVVN. Shareholding Structure 1. No change in the shareholding in the Company developing the Project will be permitted from the date of submitting the RfS till the execution of the PPA. However, this condition will not be applicable if a listed company is developing the Project. 2. After execution of PPA, the controlling shareholding (controlling shareholding will mean more than 50% of the voting rights) in the Company developing the project will be maintained for a period of (1) one year after commencement of supply of power. Thereafter, any change can be undertaken under intimation to NVVN. Financial Closure 1. The Project Developer has time limit of 210 days from the date of signing Power Purchase Agreement to achieve financial closure. 2. Project Developer also needs to submit proof of land possession (minimum 2 ha per MW), proof that requisite technical criterion have been fulfilled and specify plan for meeting the requirement for domestic content. Project Commissioning 1. The project needs to be commissioned within 13 months of PPA signing. In case of failure to achieve project commissioning within the stipulated time period, NVVN will encash the Performance Guarantee.

Delay in Months Upto 1 month Between 1-2 months Between 2-3 months Beyond 3 months

NVVN will encash % of Performance Bank Guarantee of the propriate uncompleted MWs 20% 40% 100% Project Developer to pay liquidated damages of Rs.1,00,000 /MW per day of delay

Guidelines for Selection of Solar Thermal Projects

Process 1. NVVN will invite project developers to participate in the Request for Selection (RfS) for development of Solar thermal projects under this scheme. The Project Developer needs to submit the RfS within 30 days of the invitation by NVVN. 2. The Project Developer will also need to submit non-refundable processing fee of Rs. 1 Lakh for each Project along with the RfS. Capacity 1. The project capacity will be at a minimum of 5MW and the maximum of 100MW. 2. The total capacity of Solar Thermal Projects to be allocated to a Company including its Parent, Affiliate or Ultimate Parent-or any Group Company will be limited to 100 MW. Financial Criteria 1. The Net Worth of the company should be equal to or greater than the value calculated at the rate of Rs 3 Crore per MW of the project capacity upto 20 MW. 2. For every MW additional capacity, beyond 20 MW, the net worth criteria will require additional net worth of Rs. 2 Crore per MW. Technical Criteria 1. The plant should be designed for interconnection with the State Transmission Utility (STU) at the voltage level of 33 kV or above. Further, the interconnections should be at the substation (substation should be 33kV/132 kV or higher voltage levels) and not the distribution substation. 2. The responsibility of constructing the transmission line from power plant upto 132/33 kV substation would be of State Transmission Utility. 3. The Project developer owns the responsibility to make arrangements for water required for the project. Domestic Content 1. It is mandatory for Project Developers to build the power plant with 30% local content in all plants/installations; excluding land. Project Shorlisting 1. NVVN will evaluate the Projects for short listing based on financial, technical and other listed qualification criteria. In the event, the total aggregate capacity of the Solar Thermal Projects short listed by NVVN is lower than the capacity to be selected; all the shortlisted Projects would be selected and Letter of Intent (LoI) will be issued to all the shortlisted Projects. 2. In the event, the total aggregate capacity of the of the Solar Thermal Projects short listed by NVVN is higher than the capacity to be selected, the final selection of the

3. Projects from the list of short-listed projects will be done based on discount offered by Developers on CERC Approved Applicable Tariff. 1. The Projects offering the maximum discount in Rs/kWh on the CERC Approved Applicable Tariff would be selected first and so on. 2. In order to discourage adventurous bids, Bid Bond on graded scale would need to Amount of Bid Bond applicable for every paise of discount on CERC Approved Tariff (per MW) Rs.10,000/Rs.20,000/Rs.30,000/Rs.40,000/Rs.50,000/-

Upto 10% or 10% More than 10% & Upto 15% More than 15% & Upto 20% More than 20% & Upto 25% More than 25%

be furnished along with the RfP bid.

Bank Guarantees 1. The Project Developer will 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. Bid Bond in the form of Bank Guarantee along with RfP bid (as applicable) Performance Bank Guarantee of Rs. 30 Lakh/MW at the time of PPA signing. 2. In case, NVVN offers to execute the PPA with the Project Developer and if the Project Developer refuses to execute the PPA within the stipulated time period, the Bank Guarantees towards EMD and Bid Bond will be encashed by NVVN. Shareholding Structure 1. No change in the shareholding in the Company developing the Project will be permitted from the date of submitting the RfS till the execution of the PPA. However, this condition will not be applicable if a listed company is developing the Project.

2. After execution of PPA, the controlling shareholding (controlling shareholding will mean more than 26% of the voting rights) in the Company developing the project will be maintained for a period of (1) one year after commencement of supply of power. Thereafter, any change can be undertaken under intimation to NVVN. Financial Closure 1. The Project Developer has time limit of 180 days from the date of signing Power Purchase Agreement to achieve financial closure. 2. Project Developer also needs to submit proof of land possession (minimum 2 ha per MW), proof that requisite technical criterion have been fulfilled and specify plan for meeting the requirement for domestic content. Project Commissioning 1. The project needs to be commissioned within 28 months of PPA signing. 2. In case of failure to achieve project commissioning within the stipulated time period, NVVN will encash the Performance Guarantee in the following manner:

Delay in Months Upto 1 month Between 1-2 months Between 2-3 months Beyond 3 months

NVVN will encash % of Performance Bank Guarantee 20% 40% 100% Project Developer to pay liquidated damages of Rs.1,00,000 /MW per day of delay

Event Notice for Request for Selection Submission of Applications with documents for Registration Short-listing of Projects based on RfS Applications received and decision on tariff discounting

PV Dates X date X date + 30 days

Thermal Dates X date X date + 30 days

X date + 75 days

X date + 75 days

Tariff discounting process & submission of proposals by short-listed developers

X date + 90 days

X date + 90 days

Evaluation of Tariff discounting proposals Issue of Letter of Intent PPA Signing Financing Arrangement for the project Commissioning of the Project

X date + 120 days X date + 135 days X date + 165 days X date + 375 days 13 months from PPA

X date + 120 days X date + 135 days X date + 165 days X date + 345 days 28 months from PPA