For the purpose of the solar auction in the state, Karnataka has corrected its tariff to match it with the APPC of its DISCOMS. Earlier the solar tariff was INR 4.36 a unit. Now it is INR 3.57. KERC has revised the tariff for 860 MW of solar power projects. These projects will be up for auction in 43 different talukas in the state. The revision is a result of time extension of COD the project developers have sought- from 12 to 18 months. According to the state commission, such a time period is long enough for a considerable decline in solar tariff. Further delay will make project developers eligible for only 80% of the quoted tariff.
Going by the bid results of 2017 a timeline of six months is enough for an appreciable drop in solar tariffs. When in April 2017 KERC revised the solar tariff from INR 6.51 to INR 4.36 per unit, the tariffs had already breached INR 3 in February and then in April as shown here. Further, the difference between the KERC solar tariff & the solar tariffs of different auctions were usually greater than INR 1 in the time interval of two months.
The graph illustrates the same:
Therefore to further revise the tariff to INR 3.47 is a timely intervention by KERC.
According to team SolarDae, considering the circumstances a timely intervention such as this is indispensable for a greater benefit of the solar sector.
One, it is a tariff linked to the project completion status of a solar developer. As mentioned above a further delay will cost the developers 20% of the solar tariff they quote.
Second, the revision comes even before the new financial year starts. Thus this will give the project developers ample time to adjust to the new solar tariff.
Third, there will be a little chance that Karnataka state DISCOMS will demand a further solar tariff revision. They will be procuring solar power from these projects at rates below INR 3.57 which is their current APPC.