Site Selection >>

Site identification and securing, land property or lease agreement.

Step Sub-step Details Activities Important factors to consider Authority Challenges
SITE IDENTIFICATION AND PROJECT PRE-FEASIBILITY : This step includes carrying out various due diligence activities at the identified site/s including analysis of solar insolation, geology, evacuation of power and overall financial pre-feasibility. IDENTIFICATION OF SITE The first step in project design and development is the site identification. In case of project being set up for third party sale of power or for captive purposes, the land needs to be identified by the developer. The category of the land has to be checked with the Revenue Department of the State. Further, one of the key factor in identification of a suitable site is to obtain the consent of the present owner of that piece of land, to sell. Suitability of a place includes factors such as suitable irradiation, access to site and availability of evacuation infrastructure. This step is undertaken in conjunction with other analysis such as solar radiation analysis, infrastructure analysis etc. 1. Identify a suitable piece of land
2. Obtain consent from current owners
3. Check the categorization of the land with the Revenue Department
Revenue Department/SNA Identifying ideal lands which satisfy the multiple conditions of good solar irradiation, proximity to substation, good accessibility is a challenge.
Multiple owners and local disputes prevent speedy acquisition of most lands. Local population must also be taken into confidence before acquisition. Such complex factors need to be taken into account and identifying sites which fulfil most such conditions takes time
SOLAR INSOLATION AND SHADOW ASSESSMENT : It is recommended that for ascertaining accuracy of solar irradiation data, dedicated weather stations are erected at the site for local irradiation measurement and a minimum of 12 to 18 months of data is gathered for observation. It is also recommended that ground based data be correlated with satellite and ground station data to get a better idea about the average annual irradiation and irradiation patterns at the proposed site. Site specifications including level of solar irradiation at site, temperature and structures/obstacles which may cast shadows need to be checked initially. This assessment is done using ground level assessment or using reliable data from NASA (RETScreen) or NIWE which is particular for the designated area or location. Also it is recommended that for ascertaining accuracy of solar irradiation data, dedicated weather stations are erected at the site for local irradiation measurement and a minimum of 12 to 18 months of data is gathered for observation.
Read more here.
The following have to be checked :
  • GHI
  • Wind Speed/Direction
  • Rain Accumulation
  • Air Temperature
  • Atmospheric Pressure (SLP)
  • Relative Humidity.
Technical advice is suggested for this level. NA
GEOLOGICAL DUE DILIGENCE : Preferred land orientation is flat, the same must be assessed at this stage. Other criteria of review include state of the drainage system at site, dust percentage in air and soil strength to support structures. Soil testing and geological experts are involved in the assessment of geological parameters of site. Geological testing for:
1) Degree of levelisation
2) Drainage system
3) Air system
4) Dust and soiling parameters
5) Soil texture and bearing capacity
6) Suitable foundation system for structures
7) Ground water salinity levels
Technical advice is suggested for this level. NA
POWER EVACUATION FEASIBILITY AND SITE ACCESSIBILITY : Power evacuation feasibility must be checked which would include availability of adequate capacity at the transmission utilities sub- station, distance to sub-station, right of way issues etc. Connectivity to the site (road and rail) and distance from urban areas would also need to be examined for suitability. Accessibility of site by trucks and cranes is critical and must also be evaluated. The developer has to consult and check on the interconnection voltage level with the state TRANSCO for the desired voltage level transmission corridor up to the project site. A grid feasibility study is done to evaluate the evacuation capacity of existing transmission system.
The evacuation feasibility study involves the following steps:
#Nearest feasible substation for interconnection
#Identification of interconnection point
#Voltage level
#Feeders and Bay available in the substation
#Right of Way
A letter of comfort may be provided by the SNA upon request which is then required to be submitted to the TRANSCO for a grid feasibility study. # The interconnection to the Sub station level has to be done at a specific voltage level                             # A transmission study has to be carried out to ensure that the nearest sub-station or the sub -station under consideration has adequate evacuation capacity to support the solar power plant being set up. SNA, State TRANSCO
TECHNOLOGY AND SUPPLIER SELECTION : An appropriate Solar PV technology needs to be identified based on factors such as maturity and performance of the technology, space requirement and availability, available solar insolation, cost of technology (capital and O&M), projected CUF’s, risks associated with the technologies, need for trained manpower, level of commercial development and technology support available from technology supplier, availability of technology suppliers/ performance guarantees etc. All of these factors play a critical role in the identification of a suitable technology. For the selected technology, equipment providers shall then be identified and selected. Based on the technical and feasibility studies carried out, irradiation levels, resource conversion levels, CUF requirement, technical and economical risks, manpower skills and number, availability of suppliers and spares, the most appropriate technology is chosen.

Further the conditional requirements of the nodal agency , regulatory commission and international standards and codes are also taken into account for choosing a particular technology and make. Thus the IEC for PV and grid tied inverters and local specifications suggested by MNRE/NISE must be checked and adhered to. The technology provider chosen must provide equipment which conforms to IEC standards for solar PV modules and inverters. The use of specific PV DC cables is also recommended. It is recommended that a technology having an established track record and credible technology providers need to be selected.

NA Analysis of the following:                               # Technical specifications adhering to the Sate, National and International standards                                                     #Track record of a technology NA
FINANCIAL PRE-FEASIBILITY : Preliminary calculations on the overall cost of the plant, the generation from the plant and the cost of generation would be assessed to establish project financial viability. This activity provides a go/no-go decision point for the project. Assessment of the project cost, investment requirement, cash-flow projections & expected return and financial viability of the project is critical. The pre-feasibility assessment and report shall cover the risk return assessment for the project and map the key macro risks and barriers likely to impact the viability of the project from design, implementation to operation. At the macro level assessment of following must be made:
##Development Cost
##Engineering Cost
##Land Cost
##Equipment Cost
##Construction Cost
##Operational Cost
##Funds Availability
##Cash Flow
Financial due-diligence NA NA
WATER AVAILABILITY/ CONSTRUCTION & POWER AVAILABILITY : Carried out as a part of geological/power evacuation feasibility study Water requirements are generally fulfilled through borewells and other temporary sources of water such as water tankers NA NA
PROJECT REGISTRATION PROJECT REGISTRATION : The project must be registered with the SNA along with payment of requisite fee The project has to be registered with the SNA to avail various benefits under the solar policy of the state. In some states ( Madhya Pradesh), third party and captive solar power plants may be setup without project registration but will be unable to avail several policy benefits such as concessional open access charges. The Developers/Investor who may be individual, Company, firm, society, NGO etc. may be required to submit the following documents, as applicable, for registration:

i. Application in the given format;
ii. Certified copy of Memorandum & Articles of Association of the company/ Certified copy of the bye- laws of the registered society;
iii. Certified copy of partnership deed

In case the project is found to be eligible after evaluation, a demand note for depositing the requisite processing fee is issued and such Developers may be required to deposit a processing fee (generally non-refundable) and get the project registered within a stipulated period from the issuance of the demand note; and

In case of failure to submit the processing fee within the stipulated timeline , the application for registration of the project by such Developer may be considered cancelled.

POST REGISTRATION : Activities to be carried out post registration of the project with the SNA The following documents shall be submitted by the project Developer within the specified timeline for approval:

i. Detailed Project Report (DPR);
ii. Land related document (tagged/identified project site);
iii. CPM/PERT chart (for implementation of the proposed project);
iv. Water allocation order on the basis of water availability at the project site( if applicable) and map presenting the grid situation;
v. Affidavit for abiding by the Regulations/Orders of the State Regulatory Commission, State Govt. Policies and the Guidelines/Notifications (applicable to solar based power projects) issued by the authorized Officials from time to time;
vi. Performance guarantee

PERFORMAANCE BANK GUARANTEE : A Performance Bank Guarantee is required only by Category 2 and 3 projects availing policy benefits The developer is required to deposit a specified amount in he form of Bank Guarantee having a specified validity with the SNA as Performance Security. The PBG will be released to the developer according to the specified benchmarks and time schedule


BAY ALLOCATION : Bay allocation is done by requesting the State TRANSCO for the same and submitting the requisite documents such as PPA, Feasibility report, NOC from the SNA. This may be a chargeable. Request for bay allocation can be done at any time after the pre-feasibility approval and before grid interconnection. NA TRANSCO


Project Execution >>

LAND/SITE ACQUISITION: This step includes two sub-steps which are – to achieve land lease agreement and changing land category to industrial from agricultural. Land acquisition can be made from any of the following ways:

Lease of forest land
Purchase of private land
Lease of revenue land


A detailed project report and business plan covering the site, technology, cost estimates, cash flows, risks and returns is prepared at this stage. The DPR includes information regarding the potential equipment providers or vendors and must also exhibit the credibility of vendors shortlisted for final selection.


The project developer shall develop detailed guidelines (project uptime, performance of key systems and sub systems and other design requirements, time for development, key tasks etc.) for project design and construction and based on these guidelines appoint an EPC contractor. The EPC contractor shall undertake detailed plant design with the developer based on inputs from the DPR. The project developer shall also enter into a detailed EPC agreement with the EPC contractor which shall spell out key deliverables like project completion timelines, performance guarantees and the specifications of the equipment to be used during the project construction.


Transmission agreement is signed with the state TRANSCO before commissioning of the project.


Approval or clearances would need to be attained during project construction from various departments. Major clearances which form part of this step are:

  • Pollution Control Board
  • Import/Export Certificate
  • No objection certificate from Civil Aviation Department
  • No objection certificate from district collector for setting up the project
  • Consent for establishment and consent to operate from state pollution control board
  • Permission for laying power evacuation lines by chief electrical inspector
  • Clearance under the Boilers Act 1923
  • CRZ clearance in case the project is close to the coastline
  • Permission for ‘Implementation of Metering Code’, ‘Protection System’ to be obtained from host Distribution Utility or the State Transmission Utility or the Central Transmission Utility as the case may be.

CONSENT TO ESTABLISH – Consent to Establish Certificate is to be taken before starting the construction or civil work at site. This consent is to be taken from the state pollution control board.
CLEARANCE FROM CIVIL AVIATION DEPARTMENT – Any industry installation which is in the vicinity of any airport needs to take an approval or clearance from the Civil Aviation Department.
FOREST CLEARANCE – Forest clearance from the state Forest Department may be required.
IMPORT & EXPORT CERTIFICATE – Import & Export Certificate is required by the developer for imports of any equipment from a foreign supplier. The certificate is to be obtained from the Department of Commerce, Govt. of India as per the guidelines of Directorate General of Foreign Trade (DGFT) are to be adhered.
COASTAL REGULATORY ZONE CLEARANCE – CRZ clearance is required in case the project is located close to the coast.

Before the construction work can start, drawing clearances need to be taken from Chief Electrical Inspectorate.
A total of 3 clearances are to be taken from Chief Electrical Inspector (CEI):

  • 1st clearance for construction of the transmission line -This clearance is taken before construction of line (after design is approved) and during project construction phase.
  • 2nd Clearance for construction of the substation and linking inverter – This clearance is taken before construction of substation or switch yard (after design is approved) and during project construction phase.
  • 3rd clearance is taken for connecting DC part /Solar Field with the grid through inverter. This is taken first after the design is compete and then after construction of project and before connecting it to the state grid.

Drawing approvals need to be taken with the details of the drawing and accompanying enclosures mentioned as follows:

1) Topographical map showing location of the power plant/unit.

2) Single line schematic of entire project

3) Sectional plan and elevations

4) Earthing scheme

Documents required to be submitted along with the drawing are,

1) Govt. order for having obtained permission for setting up of power plant.

2) Power purchase agreement copy.

3) Scheme of grid synchronization.

4) Power Evacuation infrastructure details including sending and receiving end equipment’s.



The project developer would need to place orders for the equipment and enter into performance guarantee agreements with equipment suppliers. The project developer would also need to see the lead time for equipment procurement and delivery while also provisioning time for obtaining customs and import duty exemptions.


The project developer appoints an O&M contractor and enters into an O&M contract. The O&M Contract specifies details regarding project uptime, personnel required, spare parts, acquisition for project for operation and management.

Some key tasks besides operation, preventive and routine maintenance include:

  • Preventive maintenance policies
  • Cleaning, washing of PV modules
  • Tracker maintenance, if applicable
  • BOS inspection
  • Penalty on underperformance


Insurance Policy is taken by the developer during the Construction period related to:

  • Damage to Equipment (During Procurement, Transit & Erection)
  • Force Majeure
  • PPA risk cover
  • Non delivery

Insurance Policy will have to be taken by the developer during the Operation period related to:

  • Theft and damage of equipment/project
  • Machinery Breakdown
  • Force Majeure
  • Risk


Financing >>

Important Steps for Fund raising or Financing:

  1. PROMOTERS APPRAISAL: This includes due-diligence of aspects related to promoters background, operational results (net worth, balance sheets, cash flows etc. -financial statements, profitability to show that the developer has the ability to contribute the equity portion of the project costs), capability to undertake project, management and organizational set-up. Developer’s ability to contribute equity, phasing of equity infusion, assessment of the risks associated with development and operation of project – identified and assessed by the developer.
  2. TECHNICAL APPRAISAL: This step includes following:Solar Radiation Verification
    A 3rd party verification of the solar irradiation level is carried out. At least two independent sources are recommended for this verification.Technology Assessment
    A certificate from the technology provider as well as the performance guarantee (contract) is submitted to the FI for review. There is a need for the technology package including components like PV Modules, inverters, DC-cables to have proven field experience over the years. The guidelines require that the technology be demonstrated in at least 1 successful project in operation.Assessment of the DPR
    An overall assessment of the DPR from technology to grid connection and financial analysis like DSCR and IRR would be undertaken and the results compared to see if they meet the FI’s own and sector norms. Adequacy of equipment and costing of the equipment from a project viability point of view.
    Due-diligence of financial & funding details related to Project Cost, means of financing, Cash flow & profitability projections, Risk assessment, Financing structure ( Debt & equity), foreign exchange risk.
    Due-diligence of Industry specific factors like market trends and costs, market attractiveness, creditworthiness of Off-taker, risk guarantees, long term demand, market drivers, regulatory & policy scenario.
    Due-diligence of environmental risks, post implementation impact
    Ensure that the project developer has obtained adequate insurance cover for project construction and project operation.
  7. LEGAL APPRAISAL: This involves due-diligence of various contractual agreements including the PPA/LOI/Land agreement and others.

ALLOTMENT CERTIFICATE & IMPLEMENTATION AGREEMENT/ PPA/ PO:                                                                    ##Due-diligence of the Project Allotment certificate & implementation agreements (PPA – conditions, timelines related to commissioning & project schedule, performance provisions & penalties)
##The FI would also check the procurement purchase orders (POs) and thus POs need to be raised for major equipment/s/ components/ systems/ services like PV Modules and inverters.
##In addition the FI may ascertain if any alternate mechanism for sale of power has been proposed in the PPA in the event of default in payments by the utility.


This shall cover:
##Due-diligence of the lease agreement signed between developer & land owner,
##Aspects related to lease rent, escalation, period of lease etc.
##Performance provisions & penalties,
##Payment terms & conditions.
##Due diligence of project land, its title deed and its hypothecation to the FI.


Due-diligence of the EPC contract & Performance Guarantees, aspects like performance provisions & penalties, payment terms & conditions, after sale service provisions.


Key considerations here include:

##Due-diligence of the approvals & clearance given by different departments/agencies
##Aspects related to conditions to be adhered to by the developer for meeting the stipulated requirements for approvals and clearances,
##Penalties to be borne by the developer,
##Whether key approvals have been achieved. Apart from the important approvals and clearances related to evacuation of power, CTE, CTO, approval for Right of Way etc. other clearances as applicable viz. water (from host state water authority for abstraction and use of water), pollution clearance etc. shall also be reviewed by the FI.


This shall cover:
##Due-diligence of the security package

##Personal Guarantee,
##Corporate Guarantee,
##Bank Guarantee,
##Mortgage of property etc.

All the agreements must be transferable to Financial institution.

8. LOAN APPROVAL: Financial institution approves loan depending upon the Project Developer meeting the required criteria.


Construction >>

Project Construction includes primarily, the signing of an EPC contract followed by installation, commissioning, acceptance test procedures.

PROCUREMENT: This includes attaining administrative concessional certificates and physically procuring the equipment. Procurement of equipment and components is carried out as per the Bill of Material or Bill of Quantity for both major and non major items. The major equipment for a solar power plant include

• Modules
• Inverters
• Transformers
• Ring Main Units
• Junction boxes and Cables

The Ministry of New & Renewable Energy (MNRE) has allowed excise duty exemption on some equipment to be used in solar plants by way of Excise Duty Exemption Certificates (EDECs) and Concessional Custom Duty Certificates (CCDCs).

These certificates are to be obtained from MNRE prior to the release of equipment from excise unit or port.

After the issue of relevant certificates and submission with excise unit and custom offices, the equipment is released.

TEMPORARY ELECTRICITY CONNECTION: During the construction phase a temporary interconnection for electricity supply is taken from local distribution utility.
WATER PERMIT: Obtaining water supply connection for and during the construction process. Prior to the start of construction at the site, a temporary electrical connection from the local/state distribution utility must be taken. This is to offset the cost of electricity in case of using a diesel generator during the construction period.
LABOR CLEARANCE: Before employment of labor at site, Registration of Licenses needs to be done with the Labor Department and the time limit for getting the same is stipulated to be 15 days.
CIVIL CONTRACT: A civil and structural contractor is appointed to carry out the works of
• Site leveling and grading
• Construction of Control Rooms, Transformer and Inverter Cabins
• Switchyard
• Internal and Periphery roads
• Foundations for Mounting Structures
• Boundary Wall and Fencing

ERECTION OF PLANT: EPC to erect the following equipment :
##Mounting Structures/Trackers
##PV Modules
##Inverter/Batteries etc.
##Transformer, Switchyard, Substation
##Monitoring System & Control

The following considerations relate to the step of plant erection:
##Erection of feeders to the nearest transformer/sub-station
##Mounting structures can be used which must be suitable to mount SPV modules and  arrays. It must be designed to withstand wind speeds at proposed location.
##Founding of mounting structures is subject to soil conditions (ramming, drilling, weight foundation) which are ascertained based on geological survey and maximum wind speed.
##Quality standards and strength of iron structure can be of importance. Further, power and control cables should be of requisite quality standards, material and shall be chosen taking into account fault level contribution to the system, full load current and voltage drop.

The owner undertakes the following major activities during the erection of the plant:
##Arrangement of Security service
##Owners engineer for construction survey
##Continuous controlling of materials installed to be of the correct specifications
##Stepwise testing of the installations
##Quality management e.g.:input inspection of all material, PV modules, inverter, cables, sub construction
##protocol of all materials supplied for warranty issues, to be countersigned
##daily protocol of work conducted, to be countersigned
##protocol of daily construction progress and all relevant circumstances and issues
##red flag report of schedule and relevant circumstances
##as built documentation, to be countersigned
#setting up of safety devices like intruder detection, CCTV cameras, boundary wall and gate
PROJECT COMPLETION AND COMMISSIONING: The step includes construction of grid interconnection arrangement and achieving the grid connection through clearances, metering and final acceptance checking of project. Most importantly, it includes the following approvals:

  • CONSENT TO OPERATE: Consent to Operate Certificate is to be taken before starting the construction or civil work at site. This consent is to be taken from the state pollution control board.
  • CEIG CLEARANCE: Clearance from Chief Electrical Inspector (CEI) is to be attained before interconnecting station to state grid in accordance with the Indian Electricity Rules 1956  (Section 47 a). THE CEIG Inspector inspects three components of the system:
    1. The solar power plant
    2. The pooling substation
    3. The transmission line constructed to the nearest substation
  • GRID INTERCONNECTION AND METERING: Temporary connection is scraped and new interconnection system is connected to grid. Local distribution utility to check the ABT meters installed by developer at the interconnection point. The project developer needs to commission the project within the timeline specified in the PPAEPC to undertake the testing of the equipment and take Utility Approval for substation connection. The Final Acceptance Test is designed to check the status of the plant and the proper functioning of the system and system components. Once it is verified that the plant complies with requirements and testing, the plant will be taken over by the owner from the EPC contractor.All warranty relevant data or testing shall be approved or tested prior to warranty ending to raise final claims by the developer and the EPC. Further, the distribution utility shall provide the necessary approvals and infrastructure for evacuation of power generated.At the time of commissioning, the developer is to draw up a punch list with the EPC contractor. This comprises of the scope of work that has been partially completed/not completed but does not impact performance or output of plant. The punch list needs to be completed by EPC contractor at a future date within a mutually agreed timeframe with the developer.The process of project commissioning follows and includes:
    ##Site inspections
    ##Mechanical Completion Test
    ##Inverter Commissioning Test
    ##Performance Test.


Operation, benchmarking of yield, improvements, maintenance, refurbishment or demolition.


The project developer may undertake operation & maintenance of the plant on its own or appoint a third party to undertake operation & maintenance by signing a Plant operation and service agreement.

The distribution utility to provide certificate of power purchased from the project on monthly basis. The certification to be based upon the joint meter taken by the project developer and distribution utility.

The project developer may evaluate the performance of the project on periodic basis and identify areas of improvement.


The developer may need to replace PV Modules, inverters and other equipment due to blow outs and faults.
Yield Management

Periodic cleaning of modules (wet or dry) as per the cleaning frequency determined or as deemed fit. The cleaning of modules must be before sunrise or after sunset to ensure no generation loss.
Equipment Maintenance

The maintenance of equipment must be done in non generation hours to avoid generation loss and grid impact. Periodic, Corrective and Condition based maintenance methods must be maintained. In case of non correction of faults, technical team of equipment manufacturer must be contacted.

The developer may assess the options related to Recycling of PV Modules, inverters etc.