The Himachal Pradesh Electricity Regulatory Commission (HPERC) has issued the generic levelized tariffs for solar PV projects for the last six months of the financial year 2019-20.

In December 2019, the Commission had requested the major stakeholders to send their suggestions on the proposal. The proposed tariff will be applicable only for small capacities up to 5 MW. The Commission prefers that distribution licensees purchase power from higher capacity projects through Solar Energy Corporation of India (SECI) or through competitive bidding route.

The Commission noted that the CERC had not made any provisions to establish the normative capital cost for solar power PV projects, and its renewable regulations, 2017, do not have any generic tariff determination. So, the Commission has decided to change its technology-specific parameters after considering the inputs.

Last year, the Commission fixed the capital cost of the solar PV projects having capacity above 1 MW and up to 5 MW as ₹38.63 million (~$541,995)/MW for the first six months of the financial year 2019-20.

The Commission noted that solar modules constitute about 47% of the total cost of a project, and the price of modules has reduced marginally during the last six months. But as the projects that have signed or will sign PPAs in the current financial year may come up in a similar timeframe, the Commission has decided to keep the capital cost at the same level as was fixed for the first six months of the financial year.

The normative capital cost for the solar PV projects up to 1 MW has been proposed to be increased by about 1.5% compared to the normative cost for the projects above 1 MW and up to 5 MW, which was ₹38.63 lakhs for the first six months of the financial year 2019-20. Accordingly, the normative capital cost for the solar PV projects up to 1 MW has been decided as ₹39.21 million (~$550,132)/MW.

The Commission has also decided to allow marginally higher capital costs for solar PV projects in urban and industrial areas to encourage the installation of solar projects in these places.

The additional capital cost for these area-specific solar projects has been proposed at the rate of ₹1 million (~$14,030.4)/MW for capacity above 1 MW and up to 5 MW. This additional cost of ₹1 million (~$14,030.4)/MW will, however, be further increased by 1.5% for projects up to 1 MW located in the urban areas and industrial areas.

The Commission has set the operation and maintenance (O&M) expenses at ₹827,000 (~$11,603.1)/MW for the financial year 2019-20. These normative O&M charges would also be escalated at the rate of 5.72% per year over the tariff period as per the renewable tariff regulations, 2017.

The Commission considered the useful life and tariff period of a solar PV project as 25 years from the date of commencement of operation of the project. The Commission has kept the normative debt-equity ratio at 70:30.

The Commission further noted that the rate of depreciation had been 5.28% per annum for meeting the requirements of loan repayment and the balance amount of depreciation has been equally spread over the remaining tariff period.

For solar projects set up in the rural and underdeveloped areas of the state, HPERC has set the tariff at ₹3.98 (~$0.0558)/kWh for solar projects of capacity up to 1 MW and ₹3.93 (~$0.0551)/kWh for solar projects of capacity more than 1MW and up to 5 MW.

For solar PV projects in industrial and urban areas, the Commission has set ₹4.06 (~$0.0569)/kWh as the generic levelized tariff for solar PV projects up to 1 MW and ₹4.01 (~$0.0562)/kWh as the generic levelized tariff for solar PV projects above 1 MW and up to 5MW.

In July 2019, HPERC had finalized the amendments to its regulation on the deviation settlement mechanism. The state commission had proposed the amendments in May 2019.

Earlier, HPERC had set the generic levelized tariff for solar projects for the first six months of the financial year (FY) 2019-20.