The Gujarat Electricity Regulatory Commission (GERC) has 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.

This decision comes in light of the revised competitive bidding guidelines issued by the Ministry of Power, which set the threshold for wind power projects to participate in the competitive bidding process at 10 MW.

Gujarat’s renewable policy also allows power distribution companies to procure power from small wind projects up to 10 MW capacity at a pre-determined levelized tariff.

GERC has determined that the useful life of wind power projects is 25 years from the date of commissioning. The normative benchmark capital cost has been set at ₹70 million (~$833,836)/MW for wind power projects of this size.

The Commission has fixed the operation and maintenance expenses at ₹700,000 (~$8,338) /MW for the first year of the control period, with an annual escalation rate of 3.84%. A normative Capacity Utilization Factor of 35% has been proposed for these projects.

The Commission has set a normative interest rate of 10.15% for the computation of interest on term loans, with a repayment period of 15 years for tariff determination purposes.

Depreciation is fixed at 4.67% per annum for the first 15 years, reducing to 2% per annum from the 16th to the 25th year for tariff determination. The normative interest on working capital is fixed at 10.65% for the control period of this tariff order.

A Return on Equity of 15.5% has been considered for tariff determination for wind power projects below the 10 MW threshold. The tax rates factored into the tariff include a Minimum Alternate Tax of 17.47% per annum for the first ten years and a Corporate Tax of 34.94% per annum for the next 15 years.

The Commission has set a discount rate of 9.77%, corresponding to the interest rate on term loans and RoE, for calculating the levelized tariff over the control period.

GERC has also provided wind project developers with 60% depreciation in the first year of commissioning.

Developers may be eligible for financial assistance, incentives, subsidies, or other benefits from the Central or State Government. If these benefits are availed, the Commission will re-determine the tariff by factoring in these benefits.

To ensure timely project execution, GERC has mandated that wind power project developers must provide a bank guarantee of ₹1 million (~$11,911)/MW to the Gujarat Energy Transmission Corporation (GETCO). This guarantee is tied to the allotment of transmission capacity. If the developer fails to commission the capacity within the stipulated timeframe, GETCO has the right to encash the bank guarantee.

Developers must commission at least 10% of the allotted capacity within one month of charging the evacuation line or as per the stipulated timeframe, whichever is earlier. Failure to do so will make the developer liable for long-term transmission charges for 10% of the allotted capacity until this portion is commissioned.

The remaining 90% of the capacity must be commissioned within one year of charging the evacuation line or as per the stipulated timeframe, whichever is earlier.

Failure to meet this deadline will result in the cancellation of connectivity and open access by the State Transmission Utility (STU) for the uncommissioned capacity. The developer will have no claim on the canceled capacity and must pay relinquishment charges as determined by the Commission.

The STU will then list the canceled capacity as a spare for renewable energy integration, making it available to prospective consumers.

In cases where unforeseen circumstances prevent the wind project developer from commissioning the entire allocated evacuation system within the stipulated time, the developer may approach the Commission to extend the deadline.

The Commission recently issued the Multi-Year Tariff Regulations, 2024, effective from April 1, 2025, to March 31, 2030.

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