The Central Electricity Regulatory Commission (CERC) has determined an interim tariff of ₹3.62 (~$0.042)/kWh for Damodar Valley Corporation’s (DVC) 8 MW solar project at Panchet, West Bengal.

DVC had requested approval for a tariff of ₹3.92 (~$0.046)/kWh. However, the Commission determined a lower amount considering the capital cost, regulatory norms, working capital interest, and other financial parameters.

Background

DVC petitioned CERC to approve a tariff of ₹3.92 (~$0.046)/kWh for its solar project for 25 years. The project aimed to supply energy to West Bengal and Jharkhand.

DVC submitted that the solar power from its project would help it meet its Renewable Purchase Obligations (RPO).

It submitted that it would require purchasing power from the market to meet its RPO obligations at a higher cost than the proposed tariff of its solar project.

It said it opted for a project-specific tariff over competitive bidding because of its small capacity of 8 MW and a comparatively smaller ₹600 million (~$7 million) investment.

DVC said it considered several factors while discovering the tariff. These factors include the cost of the 33 kV line diversion, transmission charges, and withdrawal losses. Higher panel numbers due to the project’s smaller capacity and the eastern region’s lower solar intensity also influenced the tariff determination. These expenditures increased the petitioner’s capital cost.

Additionally, DVC claimed it had not received any government subsidy for the project, increasing its costs further. It also included the project’s operations and maintenance costs in its proposed tariff.

The petitioner also contended that it purchased 40 MW of solar power from NTPC at ₹10 (~$0.12)/kWh, making the requested rate of ₹3.92 (~$0.046)/kWh competitive.

The petitioner initially aimed to sell the excess solar power from the project to its beneficiaries through bundling with thermal power.

However, it later stated that it would need the entire generated solar power to fulfill its RPO obligations and to provide power to its firm consumers within its service area. This development would make selling excess power through bundling unlikely.

Commission’s Analysis

The Commission noted that the petitioner’s bidding processes for the project were transparent and adhered to established guidelines. It also acknowledged the petitioner’s need to meet its RPO requirements.

CERC noted the petitioner’s justification for opting for a project-specific tariff but advised exploring competitive bidding first in the future.

It also considered the petitioner’s submission on the lack of government subsidies and the project’s operation and maintenance costs.

The Commission stated that the petitioner’s determined capital cost was too high and decided on a reduced amount. It held that the petitioner could not include the 33 kV line diversion expenses in the capital cost.

The Commission determined an interim tariff of ₹3.62 (~$0.042)/kWh, lower than the requested amount.

It, however, accepted the petitioner’s request to allow a revision or modification of the instant petition. It allowed the petitioner to approach it later with a detailed breakup of the project cost and other parameters.

Recently, CERC approved tariffs of ₹3.98 (~$0.046)/kWh and ₹3.99 (~$0.0464)/kWh for SJVN’s 600 MW interstate transmission system-connected wind power projects.

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