The Gujarat Electricity Regulatory Commission (GERC) has set a levelized tariff of ₹2.76 (~$0.03)/kWh for solar power projects below 5 MW commissioned between April 1, 2023, and March 31, 2027

The tariff pertains to the procurement of power by distribution licensees and others from solar projects in Gujarat. The tariff has been set for a project life of 25 years.

The Commission has set an accelerated depreciation benefit of ₹0.28 (~$0.003)/kWh and a net tariff of ₹2.48 (~$0.03)/kWh.

It has set ₹30.5 million (~$363,204.58)/MW as the benchmark normative capital cost determination of tariff for solar projects below the threshold limit of eligibility to participate in the bidding process.

The Commission arrived at the tariff after observing the tariff discovered in competitive bidding conducted by the Gujarat Urja Vikas Nigam fell between ₹2.30 (~$0.03)/kWh and ₹2.66 (~$0.03)/kWh) and falling solar module prices during the first quarter of the financial year 2024-25.

The Commission has decided to retain operation and maintenance (O&M) expenses of ₹300,000 (~$3,572.47)/MW) for the first year of operation with an annual escalation of 3.84% for tariff determination purposes.

The normative Capacity Utilization Factor will be 19% for a project life of 25 years. The debt-equity ratio of 70:30 will be considered for tariff determination.

The normative interest rate has been set at 10.15% for the computation of interest on term loans, with a loan repayment period of 15 years.

Depreciation has been set at 4.67% per annum for the first 15 years, and 2% from the 16th to the 25th year.

The working capital requirement for solar projects would include:

• O&M expenses for one month.
• Receivables of one-month charges for the sale of electricity.
• Maintenance spares at 1% of the capital cost escalated to 5% per annum

The Commission has set normative interest on working capital at 10.65%.

In alignment with GERC Multi-year Tariff Regulations 2024, the Commission set return on equity at 15.5% for projects below the threshold limit. Further, the payment of Minimum Alternate Tax has been set at 17.47% per annum for the first ten years, and Corporate Tax at 34.94% for the next 15 years.

A discount rate of 9.77% corresponding to the rate of interest on term loans and return on equity for levelized tariff calculations has been considered by the Commission.

If project developers avail financial assistance/incentive/subsidy/other benefits from the Central Government/State Government, the tariff will be determined by the Commission.

The GERC recently set a levelized tariff of ₹2.84 (~$0.034)/kWh for wind power projects with capacities below 10 MW commissioned between June 6, 2022, and March 31, 2027.

In May, the Commission mandated that the Uttar Gujarat Vij Company, Gujarat Energy Transmission Corporation, and the Energy and Petrochemicals Department should reimburse the amounts that were excessively charged to the solar developers.