Himachal Pradesh Sets Levelized Tariffs for Solar Projects Up To 5 MW for FY 2020-21

The Himachal Pradesh Electricity Regulatory Commission (HPERC) has issued generic levelized tariffs for solar projects (not exceeding 5 MW) for the financial year (FY) 2020-21.

The Commission had sought suggestions from stakeholders on its draft order in November 2020.

On the capital cost, the regulator said that since the price of solar modules in the international market was coming down, the per MW capital cost had to be lower than what was considered in previous orders.

To determine the tariff, the Commission considered the normative capacity utilization factor (CUF) as 21% in line with the Central Electricity Regulatory Commission’s (CERC) norms. The auxiliary consumption of 0.75% was considered a separate component under the CERC norms, which was not the case in previous solar tariff orders.


The Commission retained the useful life of solar projects at 25 years as per the renewable energy tariff regulations 2017.

The state regulator said that the generic levelized tariffs were being determined in its latest order only for procurement of power by the distribution company (DISCOM) from solar projects with capacities not exceeding 5 MW.

The Commission stated that CERC had neither specified any benchmark for determining the normative capital cost for the solar PV projects nor determined generic levelized tariffs in their tariff regulations, 2020. Accordingly, the Commission decided to evolve its technology-specific parameters after taking into account the available inputs.

Last year, the Commission set the capital cost of the solar projects of capacity above 1 MW and up to 5 MW at ₹38.63 million (~$541,995)/MW for the last six months of the financial year (FY) 2019-20. The capital cost considered for the FY 2021-21 is ₹37.905 million (~$519,744)/MW.

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The operation and maintenance (O&M) charges for the FY 2020-21 was set at ₹874,000 (~$11,961)/MW, and these would be escalated at the rate of 3.84% per annum over the tariff period. In FY 2019-20, it was taken as ₹827,000 (~$11,603.1)/MW escalated at the rate of 5.72% per year over the tariff period.

For calculating the tariff, the Commission approved the debt-equity ratio of 70:30 and the return on equity at 14%.

The depreciation rate for the first 15 years was considered 4.67%, and the rate of depreciation from the 16th year onwards would be spread over the balance of the useful life.

For solar projects set up in areas other than industrial and urban areas, HPERC has set the tariff at ₹3.41 (~$0.047)/kWh which is 14% lower than the previous year’s ₹3.98 (~$0.0558)/kWh for solar projects of capacity up to 1 MW.

For solar projects of capacity up to 1 MW set up in areas other than industrial and urban areas, the tariff is ₹3.48 (~$0.048)/kWh as compared to ₹4.06 (~$0.057)/kWh last year.

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These tariffs will be governed by the following provisions:

  • In cases where the joint petition for approval of power purchase agreement (PPA) has been submitted to the Commission on or after April 01, 2020, but no later than March 31, 2021, the tariffs will be applicable for the capacity commissioned on or before March 31, 2022.
  • In cases where the joint petition for PPA approval was submitted to the Commission on or before March 31, 2019, the tariffs will be applicable for the capacity commissioned during the FY 2020-21.

These tariffs will not be applicable when the distribution licensee procures power through the Solar Energy Corporation of India (SECI) or competitive bidding. They will also not be applicable if the consumers install the solar projects within their premises (rooftop or ground-mounted) under the net metering program.

In January 2020, HPERC had issued the generic levelized tariffs for solar PV projects for the last six months of the FY 2019-20.

In July last year, CERC issued levelized generic tariffs for renewables for the FY 2020-21. The project-specific tariff will apply to solar PV projects, floating solar projects, solar thermal, wind, and biogas power projects. It will also apply to municipal solid waste projects, renewable hybrid, and renewable projects with storage.

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Image Credit: Zbynek Burival