Rajasthan Electricity Regulatory Commission (RERC) has approved a ceiling tariff of ₹3.55 (~$0.043)/ kWh for solar power projects to be set up under Component C of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) program for feeder-level solarization.

The Commission directed distribution companies (DISCOMs) to apply the specified ceiling tariff in their upcoming bids. However, before each future bidding, DISCOMs should consistently assess market conditions.

Background

Jodhpur Vidyut Vitran Nigam (JdVVNL) sought approval for the levelized tariff of ₹3.55 (~$0.043)/ kWh discovered for the tender floated to commission solar projects along the Amritsar-Bhatinda-Jamnagar Corridor.

The tender aimed to set up 11 solar projects, but responses fell short, with bids received for only 10 locations for a total capacity of 27.43 MW. The spare land along the corridor, made available by the National Highways Authority of India, was earmarked for these projects.

Due to a lackluster response from bidders, JdVVNL extended the bid submission deadline several times. Eventually, on April 13, 2023, the technical bid from four participants was opened.

The bidders agreed on a reduced levelized tariff for the ten solar projects for 25 years.

JdVVNL had approached the regulator with the Commission refusing to adopt a tariff due to the need for clarifications from the Ministry of New and Renewable Energy (MNRE). The Commission sought clarity on whether these projects could be set up under the KUSUM program and whether Central Financial Assistance (CFA) would be available.

JdVVNL sought clarifications from MNRE, which confirmed that Component C allowed the installation of solar pumps catering to agriculture feeders near substations. MNRE also specified that the CFA for solar projects would be ₹10.5 million(~$125,888)/ MW.

JdVVNL also sought approval for project-wise levelized tariff for the projects to be set up under Component C of the PM-KUSUM program.

Commission’s Analysis

The Commission approved purchasing power from 10 solar power projects for 25 years at a levelized tariff of ₹3.55 (~$0.043)/ kWh.

The Commission also set the same tariff as the ceiling tariff for solar projects to be set up under Component C of the PM-KUSUM program. It directed DISCOMs to use the ceiling tariff in future bids. However, before each bidding round, they must consistently assess market conditions.

The Commission said any downward revision in costs should prompt a corresponding downward revision of the ceiling tariff in future tenders. In case of an upward revision in the ceiling tariff, DISCOMs must file a separate petition.

The Commission rejected JdVVNL’s request for exemption from filing petitions to approve the levelized tariff for a group of solar projects where the discovered levelized tariff for 25 years is less than or equal to the approved ceiling tariff. All DISCOMs must file a petition for the adoption of a tariff for each conducted bid.

The Commission advised DISCOMs to preferentially select feeders to maximize the CFA benefits and achieve lower tariffs. DISCOMs should also monitor change in law events and ensure timely recovery/payment for such events.

In March, Minister of Power R.K. Singh told the Parliament that the PM-KUSUM program benefited over 200,000 farmers as of February 28. Approximately 209,000 pumps were reported as installed or solarized under Component-B and Component-C. Rajasthan had the highest number of beneficiaries among states, with 57,692 farmers enrolled in the program.

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