RERC approves ₹3.55/kWh ceiling tariff for PM-KUSUM solar projects

According to Mercom India JdVVNL has secured approval for reduced tariffs, and RERC has directed DISCOMs to adhere to market conditions in bids.

The Rajasthan Electricity Regulatory Commission (RERC) has granted approval for a ceiling tariff of ₹3.55 (~$0.043)/ kWh for solar power projects within Component C of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) initiative, aimed at feeder-level solarisation.

In its directive to distribution companies (DISCOMs), the Commission mandated the application of the specified ceiling tariff in upcoming bids. However, it emphasised the importance of consistent market condition assessments by DISCOMs before each future bidding process.

The Jodhpur Vidyut Vitran Nigam (JdVVNL) sought approval for a levelised tariff of ₹3.55 (~$0.043)/ kWh, discovered in a tender floated for commissioning solar projects along the Amritsar-Bhatinda-Jamnagar Corridor. The tender, intended for 11 solar projects, experienced a shortfall in responses, receiving bids for only 10 locations with a total capacity of 27.43 MW. The available land along the corridor, provided by the National Highways Authority of India, was earmarked for these projects.

Due to the lackluster response, JdVVNL extended the bid submission deadline multiple times until April 13, 2023, when technical bids from four participants were opened. The bidders collectively agreed on a reduced levelised tariff for the ten solar projects spanning 25 years.

JdVVNL approached the regulator seeking tariff adoption, but the Commission refrained pending clarifications from the Ministry of New and Renewable Energy (MNRE). The Commission sought clarification on whether these projects fell under the purview of the KUSUM program and if Central Financial Assistance (CFA) would be available.

Upon seeking clarification from MNRE, JdVVNL received confirmation that Component C allowed for the installation of solar pumps catering to agriculture feeders near substations. MNRE also specified a CFA of ₹10.5 million (~$125,888)/ MW for solar projects.

JdVVNL further sought approval for project-specific levelised tariffs for Component C of the PM-KUSUM program. The Commission granted approval for the purchase of power from the ten solar projects at a levelised tariff of ₹3.55 (~$0.043)/ kWh for 25 years.

The Commission, in alignment with this decision, set the same tariff as the ceiling for future solar projects under Component C of the PM-KUSUM program. DISCOMs were instructed to utilise this ceiling tariff in forthcoming bids, with a mandate to consistently assess market conditions before each bidding round.

The Commission stipulated that any downward cost revision should correspondingly prompt a reduction in the ceiling tariff for subsequent tenders. In the event of an upward revision, DISCOMs were required to file a separate petition.

The Commission rejected JdVVNL’s request for exemption from filing petitions for solar projects where the discovered levelised tariff for 25 years matched or was lower than the approved ceiling tariff. Instead, it mandated that all DISCOMs file petitions for tariff adoption for each conducted bid.

The Commission advised DISCOMs to prioritise feeders to maximise CFA benefits and achieve lower tariffs. Additionally, DISCOMs were urged to monitor changes in law events and ensure timely recovery/payment for such occurrences. In March, Minister of Power R.K. Singh reported to Parliament that as of February 28, the PM-KUSUM program had benefited over 200,000 farmers, with Rajasthan having the highest number of beneficiaries at 57,692 farmers enrolled in the program.