The Chhattisgarh State Electricity Regulatory Commission (CSERC) has approved a tariff of ₹3.50 (~$0.038)/kWh for the procurement of 310 MW of solar power under PM-KUSUM Component-C. The petition was filed by the Chhattisgarh State Power Distribution Company (CSPDCL).

Background

The CSPDCL filed a petition seeking approval to procure solar power through a competitive bidding process.

The procurement was for 600 MW of grid-connected solar capacity to be developed under feeder-level solarization, with a 25-year power supply tenure. The bidding process resulted in 80 qualified bidders for 310 MW of capacity with tariffs ranging from ₹3.04 (~$0.033)/kWh to ₹9 (~$0.097)/kWh.

A price negotiation committee constituted by CSPDCL, based on previous Commission tariff orders and market analysis, proposed a ceiling tariff of ₹3.50 (~$0.038)/kWh.

Vishwa Shakti Industries and Soumitra Fuels challenged the proposed tariff, stating that ₹3.50 (~$0.038)/kWh was not viable due to high project costs and the requirement for Domestic Content Requirement (DCR) panels, which they claimed were around 50% costlier.

They argued that the tariff should exceed ₹4.34 (~$0.047)/kWh, referencing the generic tariff for the financial year 2024-25. Additional concerns included O&M costs estimated at ₹2 million (~$21,602)/MW/year, understatement of tariffs in other states, and Rajasthan tariffs cited in the range of ₹3.40 (~$0.037) to ₹3.55 (~$0.038)/kWh.

The stakeholders suggested changes to the bid documents, including removing the metering cost burden on developers, reassessing capital costs and central financial assistance (CFA), reducing the capital utilization factor to below 15%, including outage compensation, and providing land facilitation mechanisms.

CSPDCL rebutted these claims, stating that the discovered tariff of ₹3.04 (~$0.033)/kWh demonstrates the reasonableness of ₹3.50 (~$0.038)/kWh. DCR panel costs had also come down, it said, contending that cost assumptions made by the two objectors were inflated due to improper inclusion of equity. CSPDCL also highlighted benefits such as 30% CFA of ₹10.5 million (~$113,405)/MW, which reduces effective capital cost.

Commission’s Analysis

The Commission found CSPDCL’s bidding framework to be largely based on MSEDCL’s model, with reasonable modifications such as changes in metering clauses, and approved the bid documents.

Regarding tariff determination, it noted a wide variation in discovered tariffs, ranging from ₹3.04 (~$0.033) to ₹9 (~$0.097)/kWh, necessitating negotiation. Post-negotiation tariffs ranged between ₹3.41 (~$0.037)/kWh and ₹5.13 (~$0.055)/kWh.

The Commission benchmarked these against tariffs in other states, ranging from ₹2.90 (~$0.031) to ₹3.40 (~$0.037)/kWh, and against its own earlier tariff of ₹4.24 (~$0.046)/kWh. Financial assumptions considered included CFA of ₹10.5 million (~$113,405)/MW, an interest rate of 10.25% over 15 years, inflation at 6%, O&M cost of ₹600,000 (~$6,480)/year, and return on equity of 7%.

Based on these parameters, the internal rate of return was estimated to be between 6.68% and 9.3% across a tariff band of ₹3.30 (~$0.036) to ₹3.50 (~$0.038)/kWh.

The Commission concluded that ₹3.50 (~$0.038)/kWh was financially viable, reflected competitive market discovery, and balanced developer returns with consumer interest.

Recently, CSERC notified the Framework for Resource Adequacy Regulations, 2026, establishing a comprehensive planning mechanism to integrate renewable energy and battery storage to ensure a reliable electricity supply.

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