The Himachal Pradesh Electricity Regulatory Commission (HPERC) has approved a levelized tariff of ₹3.45 (~$0.04)/kWh for solar projects up to 1 MW and ₹3.38 (~$0.039)/kWh for projects between 1 MW and 3 MW for the financial year (FY) 2025-26.

The levelized tariff for projects between 3 MW and 5 MW is set at ₹3.32 (~$0.39)/kWh if located in areas other than urban and industrial zones.

In urban and industrial zones, the tariffs are set at ₹3.50 (~$0.041)/kWh, ₹3.4 (~$0.04)/kWh, and ₹3.38 (~$ 0.04)/kWh for the three categories, respectively.

The Commission said tariffs for solar projects up to 5 MW should be competitive. Projects with capacities above 5 MW will primarily be acquired by the Solar Energy Corporation of India or via competitive bidding.

After considering suggestions from stakeholders on the capital utilization factor (CUF), the Commission felt that a CUF of less than 21% may encourage the installation of lower efficiency modules, which would result in inefficient project operation.

While retaining the CUF at 21%, it said that with technological advancements, the CUF should normally exhibit an increasing trend.

It calculated the normative capital costs as ranging from ₹33.41 million (~$390,488)/MW to ₹34.16 million (~$399,254)/MW for rural and urban locations.

The Commission determined a debt-equity ratio of 70:30. The return on equity is 14%, grossed up to 16.81% for the first 20 years, and for the next 5 years, it is grossed up to 19.40%.

The interest rate has been worked out as 10.98% per annum. The Commission determined the rate of depreciation for the first 15 years at 4.67% and 1.99% from the sixteenth year.

The annual interest rate on working capital has been calculated as 12.48%. HPERC has considered operations and maintenance expenses at ₹1.05 million (~$12,272), with an escalation rate of 3.84%.

The commission had invited suggestions the Directorate of Energy, HIMURJA, Himachal Pradesh State Electricity Board (HPSEBL), Himachal Pradesh Power Corporation (HPPCL), Himachal Pradesh Power Transmission Corporation (HPPTCL), and SJVN, besides consumer representatives and industry associations.

In March, HPERC released the draft framework for resource adequacy, enabling electricity capacity additions to meet projected demand through a judicious mix of energy contracts at the lowest cost.

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