RERC Approves Purchase of 3 GW of Solar Power Under PM KUSUM

Rajasthan Electricity Regulatory Commission (RERC) has approved Jodhpur Vidyut Vitran Nigam’s (JdVVNL) petition to purchase 2,929.8 MW of power from 1,111 solar projects under Component-C of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM KUSUM) program for 25 years.

The final levelized tariffs range from ₹2.52 (~$0.03)/kWh to ₹3.527 (~$0.042)/ kWh.


JdVVNL initiated tender processes for 2,158 solar power projects with a cumulative capacity of 5,744.58 MW.

It received 1,111 bids for a cumulative capacity of 2,929.8 MW, servicing 152,397 agriculture consumers.

The primary objective was to establish grid-connected solar power facilities capable of fulfilling the yearly energy requirements of these feeders.

JdVVNL computed the levelized tariff adhering to guidelines outlined by the Ministry of New and Renewable Energy (MNRE) and RERC to determine the tariffs for these solar projects. This involved considering prevailing market dynamics and inputs obtained from various stakeholders, including solar module manufacturers, vendors, and bidders, particularly during negotiation meetings organized by JdVVNL and other distribution companies (DISCOMs).

The capital cost for each solar project was calculated, considering both variable and fixed components. Variable costs, contingent upon the project size, comprised expenses such as ex-works total module cost, balance of project and civil costs, grid connectivity charges, and miscellaneous expenses like legal, contingency, and liaison fees.

Fixed costs, irrespective of project size but linked to the connectivity voltage level, included expenses for the 11 kV and 33 kV connectivity lines, metering systems, and breakers.

Costs associated with installing and maintaining remote monitoring systems were factored into the levelized tariff computation, as mandated by MNRE guidelines for PM-KUSUM Component-C feeder level solarization. These costs encompassed both fixed expenses, such as system replacement costs every eight years, and recurring expenses, including monthly internet connectivity charges.

The MNRE also provided financial assistance in the form of Central Financial Assistance (CFA), calculated at 30% of the estimated installation cost of solar power projects, as per program guidelines. Additionally, land lease rents were determined based on government-approved rates, with provisions for periodic escalations.

Commission’s Analysis

In its previous rulings, the Commission endorsed a ceiling tariff to streamline the process. However, considering the experience of DISCOMs, pricing trends, and the necessity of approaching the Commission for tariff adoption after each bid, it was deemed appropriate to cease specifying a ceiling tariff.

DISCOMs are now advised to conduct their own rate analysis for each tender and carry out transparent bidding as mandated by MNRE. If the reasonableness and alignment of the discovered rates with market trends are satisfied, DISCOMs may approach the Commission for tariff adoption.

JdVVNL has indicated that letters of award for several projects have been issued to bidders who quoted for multiple projects. In response, MNRE, through its revised guidelines, suggested grouping multiple substations as one bidding group to avail economies of scale. Solar power developers can quote a common tariff for all projects under one group by signing a single power purchase agreement with DISCOM.

The Commission wanted DISCOMs to explore this possibility and study the best practices of other states to expedite program implementation and discover lower tariffs beneficial for farmers and end consumers alike.

The Commission noted that the present petition by DISCOM had provided parameters for the levelized tariff based on regulations, components, assumptions, and references utilized in competitive bidding. Therefore, the Commission refrains from delving into these details, considering that the petition is filed under Section 63 for approval of tariff discovered through transparent, competitive bidding.

The Commission stressed the importance of integrating more distributed power. Implementing programs like PM KUSUM Component-C earnestly by DISCOMs can transform the sector. However, with the proliferation of such projects, certain system studies and measures for storage and balancing may become necessary. Consequently, the Commission directed all DISCOMs to undertake system studies in this context.

DISCOMs were instructed to conduct system studies if needed, perform rate analysis for future bids, explore grouping multiple substations for lower tariffs, prioritize feeders for maximum CFA benefits, monitor changes in law, and adhere to MNRE guidelines for implementing feeder-level solarization under Component-C of PM KUSUM program.

Last November, RERC approved a ceiling tariff of ₹3.55 (~$0.043)/ kWh for solar power projects to be set up under Component C of PM-KUSUM.

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