In order to support the renewable energy sector, government plans to provide viability gap funding (VGF) for solar power projects in the second phase of the national solar mission.

Reports suggest that the union renewable energy ministry decided to provide VGF for 2,500 mw of solar projects out of 3,000 mw for which the reverse bidding will happen in June this year. Balance 500 mw will be bundled with conventional power like the first phase.

According to the established practice, bidders would bid for VGF requirement in Rs per mw and the bidder with minimum VGF requirement would be selected.

Reports suggest that the renewable energy ministry is looking at the finance ministry and ministry of power to allocate resources but has been disappointed till yet.

Although the allocation for disbursement has been approved, the finance ministry has not yet released the national clean energy fund (NCEF), reports indicate. Grants of Rs 160.80 crore for FY 2011-12 and 35.88 crore for FY 2012-13 under budgetary head 'Grid Interactive and Distributive Renewable Power', and 6.55 crore for FY 2011-12 under budgetary head 'Research, Design and Development in Renewable Power' have been allocated to MNRE, but not yet received, reports suggest.

It is learnt that the tight fiscal deficit situation is preventing the government from releasing any funds including NCEF.