Rajasthan Electricity Regulatory Commission (RERC) approved a pre-determined levelized tariff of ₹3.04 (~$0.036)/kWh for 5,000 MW solar capacity under Component-A of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM).

This tariff will also be the ceiling price in future competitive bidding processes.

The Commission also directed power distribution companies (DISCOMs) to conduct system studies for proper grid integration, consider energy storage solutions, and ensure compliance with the PM-KUSUM guidelines.

Background

Jaipur Vidyut Vitran Nigam filed the petition on behalf of the three Rajasthan DISCOMs—Jaipur Vidyut Vitran Nigam, Ajmer Vidyut Vitran Nigam, and Jodhpur Vidyut Vitran Nigam. The petition sought regulatory approval under to implement 5,000 MW of solar power capacity under PM-KUSUM.

The petitioners highlighted that PM-KUSUM, aimed to promote decentralized renewable energy generation. The DISCOMs argued that implementing Component-A (small-scale solar power projects up to 2 MW) would help them procure cheaper solar power at ₹3.04 (~$0.036)/kWh, compared to their existing average landed power purchase cost of ₹4.11 (~$0.048)/kWh.

Several stakeholders, including power producers and industry experts, raised objections regarding the capital cost assumptions, capacity utilization factor (CUF), land lease rates, and the absence of energy storage solutions in the proposal. Some stakeholders argued that the proposed tariff of ₹3.04 (~$0.036)/kWh was too low to ensure financial viability.

Others questioned the methodology used to determine project costs, particularly the capital cost of ₹26.9 million (~$314,210)/MW, which some believed was underestimated.

There were also concerns about grid stability and integration challenges, given the large-scale deployment of solar power projects.

Commission’s Analysis

The Commission noted that the petitioners had considered prevailing market rates and consultations with manufacturers when estimating capital costs. It acknowledged that some stakeholders argued for higher cost estimates but found recent bids under Component-A discovered tariffs even lower than ₹3.04 (~$0.036)/kWh. The approved capital cost of ₹26.9 million (~$314,210)/MW was deemed reasonable based on market conditions.

The petitioners proposed a CUF of 17%, which was higher than the 15% prescribed in MNRE guidelines but lower than the 20% in RERC regulations. The Commission accepted this CUF based on past performance data of similar projects.

The petitioners had considered land lease costs of ₹80,000 (~$934)/hectare/year, with a 5% escalation every two years. The Commission found this rate acceptable but directed DISCOMs to monitor regional variations and report any significant cost differences in future petitions.

Some stakeholders raised concerns about the impact of injecting 5,000 MW of solar power into the grid without energy storage solutions. The Commission directed DISCOMs to conduct detailed system studies, collaborate with academic institutions for grid impact analysis, and explore energy storage options in future procurement plans.

The Commission recognized the potential for increased daytime solar generation and directed DISCOMs to propose time-of-the-day tariff adjustments to shift consumption to daylight hours.

The Commission reviewed compliance reports and found that DISCOMs had largely adhered to its previous orders, including tariff ceilings, performance-based incentives, and procurement mechanisms.

The Commission approved the levelized tariff of ₹3.04 (~$0.036)/kWh for 5,000 MW of solar capacity and allowed the petitioners to approach it for tariff revisions if market conditions warranted changes.

In September last year, the Commission approved the final levelized tariff for Jaipur Vidyut Vitran Nigam’s and six projects of Jodhpur Vidyut Vitran Nigam’s solar projects under Component-C of the PM KUSUM.

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