The Cabinet Committee on Economic Affairs has approved the formation of a Special Purpose Vehicle (SPV) for implementation and operation of the Model Solar Power Project at Neemrana, Rajasthan as a 100 percent subsidiary of the Delhi Mumbai Industrial Corridor Development Corporation (DMICDC).

The total financial implications for the Government of India is around Rs. 35.34 crore, out of which the equity component is Rs. 13 crore and the debt component is Rs. 22.34 crore.

The project demonstrates the integration of solar power with industrial diesel generator sets (as the backup facility). The project has the latest cutting edge technological breakthroughs in the field of solar generation and smart grid from Japan and is expected to yield the following benefits:

a) Production of green power while reducing CO2 emissions by cutting down diesel consumption.

b) Demonstrating the concept of integrating solar power with industrial diesel generator sets through smart micro grid technology;

c) Enable the dissemination of solar PV and smart micro grid technology on a large scale and promote replication of this technology in other industrial areas which will help in reducing the carbon footprint by combining solar power with DG power;

d) Promote manufacturing of solar panels and other equipment facilities.

The Government of India is developing the Delhi Mumbai Industrial Corridor (DMIC) Project as a global manufacturing and investment destination by utilizing a high capacity 1483 km long western dedicated Freight Corridor as the backbone. The Government of India in association with the Government of Japan has proposed to develop a model Solar Power Project at Neemrana, Rajasthan using cutting edge Japanese technology.

The SPV for the implementation and operation of the Model Solar Power Project will be a 100 percent subsidiary of DMICDC. A sum of Rs 13 crore required for subscription to the equity of DMICDC (i.e., the proposed SPV) as well as Rs 22.34 as debt to the SPV will be released by the DMIC Trust to DMICDC. The upsides from such investment will flow back to the DMIC Trust. The power generated through the 5MWp component would be sold to NTPC Vidyut Vyapar Nigam Ltd (NVVN) at a tariff of Rs. 8.77 per unit (derived as weighted average of tariffs arrived in the bidding for 350 MW Solar Power in Batch-11 of Phase I of JNNSM). 1 MW Smart Micro Grid (1 MW Solar PV integrated with 1 MW Diesel Generator sets) will be used for supplying power to identified industrial consumers in the Neemrana Industrial Park and will be operated for a period of 10 years. The tariff applicable to industrial consumers will be determined at the time of signing the Power Purchase Agreement by the SPV with users.

Background:

The model Solar Power Project is conceived as the first Smart Micro-Grid project in India, demonstrating the integration of solar power with industrial diesel generator sets (as the backup facility).The Model Solar Power Project consists of the development of 6 MWp Solar PV and 1.6 MW Diesel Generator Set integrated with a Smart Micro Grid feeding power to industrial consumers in Neemrana Industrial Park. The Government of Japan is providing equipment of about Rs 116.29 crore for the project in the form of a grant.

Formation of Special Purpose Vehicle to implement model solar smart micro grid, with funding and tariff framework for power sales. Approval establishes a 100 percent subsidiary SPV of DMICDC to implement a Model Solar Power Project at Neemrana, capitalised by equity and debt released by the DMIC Trust to DMICDC with returns flowing back to the Trust. The SPV will develop an integrated solar PV and diesel generator smart micro grid, sell a portion of generation to a power trader at a tariff derived from competitive procurement, and supply identified industrial consumers under PPAs with tariffs fixed at signing.