Guidelines for off grid and decentralized solar projects   

A Committee constituted by MNRE, would approve the project within 45 days of receiving the project. Deficiency, if any, would be communicated in writing to the proposer/channel partner within 30 days and the Committee would then, on receipt of clear proposal approve the proposal.

The project proposals shall considered and sanctioned by a Project Approval Committee (PAC).  Funding under the scheme would be in Project mode, i.e. there must be a project report would, inter alia, include client details, technical & financial details, O&M and monitoring arrangements.

The total project cost shall be funded through a mix of debt and incentives where the promoters' equity contribution would be at least 20% (unless otherwise specified). Techno- economic specifications for a minimum cut-off level for the requirement of the project mode would be specified by MNRE. 

MNRE would provide financial support through a combination of 30 % subsidy and/or 5% interest bearing loans . The bench mark project cost for 2010-11 have been worked and the CFA of 30% thereof has been defined in the boundary conditions. For the year 2010-11, the benchmark price for photovoltaic systems with battery back-up support is considered as Rs.300/- per Wp.

In case of the systems, which do not use storage such as water pumping systems, the installed PV system cost is considered as a maximum of Rs.210 per Wp.  Capital subsidy of 90% of the benchmark cost , would be available for special category states, viz. NE, Sikkim, J&K, Himachal Pradesh and Uttarakhand.

In addition, it would be extended for setting up only stand alone rural solar power / packs (both PV and thermal) in remote difficult areas such as Lakshadweep, Andaman & Nicobar Islands, and districts on India's international borders. However, for funding solar thermal systems in these areas, the subsidy will be limited to 60% for all categories of beneficiaries. 

 In the interest of sustaining of satisfactory performance and generation of output in the envisaged energy forms a flexible funding approach can be considered from the following bouquet of instruments 

RE Voucher/Stamp A Transaction-cost free redeemable financial instrument, denominated in physical or monetary units. Placed in the hands of ultimate beneficiary it empowers him by giving him enhanced degree of funds. Hence, it can be used as an effective instrument to gauge and enhance consumer satisfaction at the retail level. 

Capital Subsidy (Credit Linked and non credit Linked) An instrument which lightens the burden of financing the initial project cost to enable closure of viable business proposition 

Interest Subsidy An instrument aimed at neutralizing the high cost of capital given after due diligence of credit appraisal by FIs, NBFC, Micro finance institutions.  

Viability Gap Funding Financial support provided mostly in the form of initial grant in one or more installments to the project cost. PPP Scheme of Ministry of Finance has this arrangement for physical infrastructure projects. It is supplemented by similar arrangement at the state level.  

Green Energy Bonds A form of low interest bearing long-term redeemable security, which could be issued by IREDA / MNRE for Renewable Energy Projects. Analogy: Infrastructure Bond/Gold Bonds. 

The release of funds for the project shall be back ended as reimbursement on completion and verification thereof. However for programme administrators, the release of funds could be front ended, with installments of 70% on sanction and 30% on completion.

However, this could be extended to other entities on provision of appropriate sureties. MNRE would place 50% of the estimated annual requirement of funds with IREDA upfront at the beginning of the year. The balance 50% would be released as second and final tranche of the annual requirement to IREDA after receipt of Utilisation Certificate, of not less than 50% of the first tranche released to IREDA.

While releasing the second tranche, MNRE would take into consideration, revision in initial annual estimate (if any) for appropriate funding. IREDA would present an audited annual statement of accounts. 

The government would engage a reputed agency as a Project Management Consultant (PMC). This agency would handle all the processes such as assistance formulation, appraisal and screening of proposals preceding the formal approval which would be a sovereign function of MNRE. 

The Use of imported complete PV systems will not be permitted under the scheme. However, use of imported components of a complete PV system would be permitted, subject to adequate disclosure and compliance to specified quality norms and standards.