Jharkhand Commission Issues Draft Regulations to Determine Solar Tariffs
Tariffs will be determined on a case-by-case basis for solar projects less than 10 MW
July 2, 2025
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The Jharkhand State Electricity Regulatory Commission (JSERC) has issued draft regulations to determine the tariff for procuring power from solar and solar-thermal power projects.
The tariff for solar projects will be determined through competitive bidding, which the Commission will adopt. However, if no bids are received for projects above 10 MW, the Commission will approve a project-specific tariff.
Tariffs will be determined case-by-case for solar projects with less than 10 MW capacity.
The Commission will determine project-specific tariffs for ground-mounted solar, rooftop solar, floating solar, solar-thermal, solar-hybrid, and solar projects, including those with storage systems.
The tariffs will be determined on a levelized basis, considering the year in which the projects are commissioned. These tariffs will be effective for the entire project duration. A discount factor equivalent to the post-tax weighted average capital cost will be used for calculating levelized tariffs.
The project tariffs will include capital cost, capacity utilization factor (CUF), auxiliary consumption, return on equity, interest on loans, depreciation, interest on working capital, and operation and maintenance expenses.
Once enacted, the control period under these regulations will be in effect until March 21, 2028.
Capital Costs
Capital costs will include the cost of land, pre-development expenses, all capital works such as plant and machinery, civil works, erection, commissioning, financing costs, interest during construction, and the cost of evacuation infrastructure up to the interconnection point.
For tariffs determined specifically for a project, the generating company must submit a detailed breakdown of the capital cost components along with its petition.
Debt-Equity Ratio
The debt-equity ratio will be considered as 70% debt and 30% equity for determining project-specific tariffs.
If the equity invested exceeds 30% of the capital cost, the excess amount will be treated as a normative loan. If the equity invested is less than 30%, the actual equity will be used for tariff determination.
The debt-equity ratio will be calculated after subtracting any grant or capital subsidy received for the project to determine the actual amount of debt and equity.
Loan Tenure and Interest
A loan tenure of twelve years will be considered for both generic and project-specific tariff calculations. For tariff computation, the normative interest rate will be taken as 250 basis points above the average one-year marginal cost of funds-based lending rate of the State Bank of India, based on the average rate available during the most recent six-month period.
Even if the project developer has availed a moratorium period, loan repayment will be considered from the first year of commercial operation. The amount of repayment each year will be equal to the annual depreciation allowed.
Depreciation
The asset’s capital cost will serve as the base value for calculating depreciation. A salvage value of 10% will be assumed, and depreciation will be allowed for up to a maximum of 90% of the capital cost.
Annual depreciation will follow the differential depreciation approach, applying a straight-line method. The depreciation rate will be 5.83% per year for the first twelve years of the tariff period. The remaining depreciation will be distributed over the rest of the project’s useful life starting from the thirteenth year.
Depreciation will be applied from the first year of commercial operation. If the asset becomes operational for only part of a year, depreciation will be charged on a pro-rata basis.
Return on Equity
The normative return on equity will be 14% for renewable energy projects, excluding solar plus storage. For solar projects with storage, this rate will be 15%. The normative return on equity will be increased by the most recent notified minimum alternate tax rate for the first twenty years of the tariff period and by the most recent notified corporate tax rate for the remaining tariff period.
Capacity Utilization Factor
The minimum CUF for solar projects will be 21%. The CUF for solar-thermal projects will be 23%, and for floating solar projects will be 19%.
The number of hours in a year for CUF calculation and plant load factor will be 8,766 hours.
Storage Efficiency
The minimum efficiency for solid-state batteries must be 85%, and for pumped storage projects, it must be 75%.
Scheduling
Solar and solar-thermal projects of at least 10 MW capacity will be treated as ‘must run’ and will not be subjected to merit-order despatch principles.
Main and check meters must be able to communicate their readings to the state load dispatch centre on a real-time basis.
Jharkhand aims to add a cumulative capacity of 4 GW in the state by 2026. This includes 900 MW of floating solar, 400 MW of canal top solar, and 250 MW of rooftop solar projects.
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