Tariff for 110 MW of Solar Projects Reduced to ₹2.44kWh from ₹2.97kWh in Kerala

The Kerala State Electricity Regulatory Commission (KSERC) has approved a reduced tariff of ₹2.44 (~$0.033)/kWh proposed by the Kerala State Electricity Board (KSEB) to procure 110 MW of solar power from TP Saurya, a wholly-owned subsidiary of Tata Power.

Background

KSEB had invited bids to procure 200 MW of solar energy in September 2020. NTPC and Tata Power were declared the successful bidders in the auction and won 90 MW and 110 MW capacity, respectively, at ₹2.97 (~$0.041)/kWh.

KSEB had filed a petition to approve power purchase agreements with NTPC and Tata Power to procure 90 MW and 110 MW of solar power, at ₹2.97 (~$0.041)/kWh and grant permission to sign the PPA with TP Saurya.


In its earlier order, the state Commission approved the power purchase agreement (PPA) signed between KSEB and Tata Power Company for procuring 110 MW of solar power at ₹2.97 (~$0.041)/kWh.

However, KSEB noted that the rate discovered through the reverse auction to procure 200 MW of solar power was relatively high compared to various auctions by Solar Energy Corporation of India (SECI). Hence, it issued a direction to reconsider the power procurement process.

Tariff discovered in SECI’s Tranche-IX auction of ₹2.44 (~$0.034)/kWh was considered along with ₹0.07 (~$0.0009)/kWh of trading margin.

The state electricity board observed a difference of ₹0.44 (~$0.0059)/kWh between the rate discovered in the KSEB bid and the tariff discovered in SECI’s Tranche-IX auction  (KSEB periphery ₹2.53 (~$0.034)/kWh with a loss of 3.5%). Therefore, the additional liability for KSEB was calculated at ₹16.4 million (~$219,216) per month at a capacity utilization factor (CUF) of 25%.

Therefore, KSEB requested TP Saurya and NTPC to reconsider the tariffs. TP Saurya offered to reduce the rate to ₹2.44 (~$0.033)/kWh instead of ₹2.97 (~$0.041)/kWh. However, NTPC denied reducing the tariff. Hence, KSEB decided not to execute the PPA with NTPC at the tariff of ₹2.97(~$0.041)/kWh.

The state electricity board decided to procure 110 MW of solar power from TP Saurya at ₹2.44 (~$0.033)/kWh and execute the PPA to procure energy. It requested the Commission to approve a reduced tariff of ₹2.44 (~$0.033)/kWh and ratify the action of KSEB in executing the PPA with TP Saurya for the procurement process.

Commission’s analysis

 The Commission noted that solar power generator TP Saurya agreed to KSEB’s request and reduced the tariff. The reduced tariff offered by TP Saurya and accepted by KSEB is beneficial for the state’s consumers. Therefore, the Commission approved the reduced tariff of ₹2.44 (~$0.033)/kWh for procuring 110 MW of solar energy.

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