Benchmark Tariff of ₹3.11/kWh for Solar and ₹2.86/kWh for Wind Proposed in Tamil Nadu

The Tamil Nadu Electricity Regulatory Commission (TNERC) has released consultative papers to determine the benchmark tariff for solar and wind projects developed in the state.

TNERC has proposed a benchmark tariff of ₹3.11 (~$0.047)/kWh without accelerated depreciation (AD) for solar power and ₹2.86 (~$0.043)/kWh without AD for wind. The proposals are open to suggestions and comments until March 23, 2018.

The proposed benchmark solar tariff of ₹3.11 (~$0.047)/kWh without AD is 30.8 percent less than the previous benchmark tariff of ₹4.50 (~$0.07)/kWh without AD. In the proposed tariff order, TNERC has fixed the AD component for solar at ₹0.06 (~$0.0009)/kWh.

The new benchmark tariff will apply after the one-year control period of the previous TNERC tariff order expiration. TNERC has fixed one year as the control period for this solar tariff order.

To arrive at the new benchmark tariff, TNERC has considered ₹35 million (~$537,549)/MW as the capital cost, a capacity utilization factor (CUF) of 19 percent, a debt equity ratio of 70:30, and useful project life of 25 years.

A discount factor of 8.75 percent, equal to the post tax weighted average cost of the capital on the basis of normative debt equity ratio (70:30) has been adopted for the purpose of the levelized tariff computation.

TNERC has proposed a benchmark tariff of ₹2.86 (~$0.04)/kWh without AD for wind power. This is 45.45 percent less than the previous benchmark tariff of ₹4.16 (~$0.063)/kWh without AD for wind projects in Tamil Nadu. In the proposed tariff order, TNERC has fixed the AD component for wind at ₹0.06 (~$0.0009)/kWh.

The new benchmark tariff will apply after the current tariff order expires on March 31, 2018. TNERC has set two years as the control period for this wind tariff order.

For determination of the wind power tariff, TNERC has considered capital costs of ₹50.25 million (~$806,323)/MW, CUF of 29.15 percent, a debt to equity ratio of 70:30, and useful project life of 25 years.

In February 2018, Karnataka Electricity Regulatory Commission (KERC) proposed an even lower benchmark tariff of ₹2.79 (~$0.043)/kWh for new MW-scale, grid-connected solar photovoltaic (PV) projects developed in the state.

With widespread adoption of solar PV and no investment or activity in solar thermal (CSP), even after issuing three tariff orders, this year the TNERC has proposed to do away with the exercise of coming up with a generic tariff for solar thermal power projects.

Recently, the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) revealed its plans to tender 3 GW of renewable energy capacity. The capacity will consist of 1.5 GW of solar projects and 1.5 GW of wind power projects.

 

Saumy Prateek Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.