Tamil Nadu Electricity Regulatory Commission (TNERC) has proposed to set the solar energy tariff for FY20 at INR 3.04 per unit. It has invited the stakeholders to send their suggestions by 1st March 2019. Solar tariff for current fiscal in Tamil Nadu is INR 3.11 per unit without Accelerated Depreciation (AD) benefits.
TNERC is walking a tight rope to determine the solar energy tariff
Solar energy tariffs in India have been hovering well below INR 3 per unit. Why should a regulatory commission propose it over the mark? Although this is a draft proposal and the TNERC will fix a tariff only after consulting the stakeholders but shouldn’t the commission set the parameters accordingly to keep the consultive tariff at par with INR 3?
TNERC has actually walked the rope in preparing the draft. It has cited the solar tariff trends during the calendar year 2018. Uttar Pradesh has been infamous in cancelling solar tenders twice that had been bid out citing high tariffs. Retendering the bid, of course, brought down the tariffs but remained above INR 3.
The commission has fixed the capital cost to INR 3.35 Cr./MW. The capital cost is considerably less in comparison to the previous years. Considering this fact the tariff has accordingly come down. It is the borrowing cost in India which has been firming up to push the solar energy tariffs higher.
But whatever be the final tariff after the stakeholder’s consultation it will have a little bearing on anyone as the solar energy tariff will only act as a ceiling tariff for the upcoming projects in the state. If project developers have access to foreign funding where the cost of debt and equity is less they will be able to bring down the solar energy tariff.
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