The Karnataka Electricity Regulatory Commission (KERC) has fixed ₹3.74 (~$0.058)/kWh as the generic tariff for wind projects in Karnataka. The new benchmark tariff will be applicable through March 31, 2018.

According to public comments from the wind industry, “The Solar Energy Corporation India (SECI) bid price for wind cannot be taken as a benchmark as the projects are yet to be commissioned.” In India’s first-ever wind power auction of 1 GW, wind tariffs fell to a low of ₹3.46 (~$0.054)/kWh, but this tariff is not viable for developers in Karnataka, according to project developers and wind turbine manufacturers.

The KERC has proposed a debt-equity ratio of 70:30 for tariff determination. Proposed project costs are ₹62 million (~$0.97 million)/MW at a CUF of 28 percent. In determining the generic tariff, the KERC has taken into consideration a 75 percent domestic loan component and a 25 percent foreign loan component. The average interest rate consideration for domestic loans and foreign loans will be approximately 9.23 percent.

The KERC has stated that loan tenure will be 13 years. The project depreciation rate will be set at 5.38 percent of the capital cost for the first 13 years for recovery of debt, with remaining depreciation spread during the balance of the useful life of a project.

The KERC has proposed a 16 percent return on equity (RoE) for wind projects. The tenure of PPAs will be 20 years, with an option for the developer to extend it for another five years.

Projects that have already entered into PPAs and were approved by the KERC prior to the issuance of this order will receive the old tariff of ₹4.50 (~$0.07)/kWh.

Previously Mercom reported that the KERC issued an advisory to the state government of Karnataka, asking it to direct all distribution companies (DISCOMs) in the state not to enter into any new PPAs with wind power projects until further review by the KERC.

According to Karnataka Renewable Energy Development Ltd., Karnataka has ~7.5 GW of total installed capacity from renewable energy sources, with 3.84 GW of Wind, as of August 2017.