The Uttarakhand Electricity Regulatory Commission (UERC) has extended the existing generic tariff of ₹4.64 (~$0.55)/kWh for the financial year (FY) 2023-24 for solar power projects allocated under the Mukhyamantri Saur Swarojgar Yojna (MSSY) Program for three years, i.e., until March 31, 2026.

The MSSY program intended to allocate 10,000 small solar power projects with capacities of 20/25 kW. A total of 150 solar power projects, with capacities of 20/25 kW (with a combined capacity of around 3.5 MW), have been successfully installed and commissioned until March 2023.

Background

The Uttarakhand state government introduced the MSSY program to promote self-employment through solar farming, aiming to tackle resource scarcity among residents and farmers.

The initiative seeks to empower small and marginal farmers by enabling them to create self-employment opportunities by installing small solar power plants on unused or barren land, allowing them to sell the generated electricity to Uttarakhand Power Corporation (UPCL).

The Uttarakhand Renewable Energy Development Agency (UREDA), the designated nodal agency for implementing the MSSY program in the state, had filed the petition with the UERC seeking to establish a gross generic tariff of either ₹4.49 (~$0.054)/kWh or higher for 246.5 MW of solar projects determined by the Commission for FY 2023-24 under the program.

The tariff was sought to be fixed for three years and allotted to applicants against ground-mounted projects with a capacity of 20/25/50/100/ 200 kW.

UREDA also asked the Commission to instruct the UPCL to conduct a technical feasibility report for the beneficiaries selected by UREDA under the program and establish a Power Purchase Agreement (PPA) once the projects are successfully installed.

The petitioner expressed concern that the successful implementation of the program could be negatively impacted if the Commission’s gross generic tariff for solar projects falls below the existing tariff of ₹4.49 (~$0.054)/kWh, due to increased module costs from the imposition of GST and customs duty by the Government of India.

The respondent UPCL highlighted that the RE Regulations of 2018 require the annual adjustment of solar benchmark capital cost, tariff, and power purchase agreement period, making it impractical to set a fixed tariff for a three-year duration.

UPCL also argued that setting a tariff, such as ₹4.49 (~$0.054)/kWh or the one determined for FY 2023-24 (whichever is higher), for the next three years could lead to a situation where two different benchmark tariffs coexist simultaneously, especially since the installation period for both types of generators would be the same.

This scenario might result in unequal treatment of two sets of generators from the same state who choose to install plants simultaneously, as their tariffs would vary significantly.

Commission’s Analysis

The Commission noted that multiple revisions were made to the mentioned policy, raising the capacity limit and permitting solar power plants of 50/100/200 kW to be established under the MSSY Scheme.

Regarding Type-V projects of the Uttarakhand Solar Policy of 2023 outlines that projects executed under the MSSY program fall within this category, and DISCOM will buy the electricity produced by solar projects in this category at a predetermined tariff set by the Commission periodically.

After reviewing the MSSY program, the Commission notes that the technical parameters of the MSSY program specify that permission for solar power project development will be granted to selected beneficiaries based on UPCL’s Technical Feasibility Report and available land.

Therefore, the Commission recommends that UPCL follow the provisions outlined in the program and the relevant regulations of the Commission.

The Commission noted that the MSSY program already specified that the tariff determined by the Commission for the year of commercial operation would apply to the power procured from solar power projects under the program.

The Commission agreed with UPCL that having different tariff rates for similar technology and financial parameters would be inappropriate.

Therefore, the Commission decided that the tariff for solar power plants under the MSSY scheme would be ₹4.64 (~$0.53)/kWh, applicable for FY 2023-24, and this tariff would remain valid for three years until March 31, 2026.

After these three years, the tariff applicable for the year of commissioning would apply.

The Commission also advised UREDA to ensure the timely commissioning of the projects and support the beneficiaries.

In May, UERC announced the generic tariff for solar, solar thermal, and grid-interactive rooftop and small solar projects to be commissioned in FY 2022-23. It approved the benchmark capital cost of ₹9.08 million (~$480,198)/MW and ₹13.70 (~$0.178)/kWh for solar and solar thermal projects commissioned on or after April 1, 2022.

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