The Punjab Energy Development Agency (PEDA) has issued a letter of award to VP Solar Generation to develop 66 solar power projects of 4 MW each, totaling 264 MW.

These solar projects are part of the feeder-level solarization initiative under Component-C of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) program. Once operational, they are expected to generate approximately 400 million units of electricity annually, attract investments of ₹10.56 billion (~$123.85 million), and save the state an estimated ₹1.76 billion (~$123.84 million) annually in agricultural subsidies.

The projects, to be installed at 66 kV Punjab State Power Corporation (PSPCL) substations, are scheduled for completion by December 2025.

The Punjab State Electricity Regulatory Commission (PSERC) recently approved a tariff of ₹2.38 (~$0.028)/kWh for procuring power from these solar projects. This tariff was discovered through a transparent bidding process conducted by PEDA, which evaluated 34 bids and conducted an e-reverse auction.

The tender for these projects was floated in August this year.

The initiative will contribute to reducing carbon emissions and achieving Renewable Purchase Obligation targets under the distributed energy component.

PSPCL filed the petition for tariff adoption and approval of the power procurement arrangement with PSERC. The corporation argued that the initiative is critical for meeting RPO targets mandated by the Electricity Act. PSPCL emphasized that the discovered tariff is economical, lower than previously approved rates, and avoids additional costs related to transmission losses.

Despite its many advantages, the PM-KUSUM program faces unresolved issues regarding adjusting excess solar energy against the agricultural subsidy provided by the Punjab government. PEDA and PSPCL have requested clarity on this matter, particularly concerning compensation for distribution costs. The government has yet to respond.

The PSERC expressed concerns over the lack of detailed proposals and justifications for these adjustments. It directed PSPCL, PEDA, and the Government of Punjab to submit comprehensive methodologies and justifications for accounting for solar energy within the agricultural subsidy framework.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.