Madhya Pradesh Sets Levelized Tariff of ₹3.07/kWh for KUSUM Program’s Solar Projects

The tariff will be applicable for the entire life of the projects commissioned until March 31, 2024


The Madhya Pradesh Electricity Regulatory Commission (MPERC) has set a pre-fixed levelized tariff of ₹3.07 (~$0.042)/kWh under Component A of the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan (PM- KUSUM) program for the entire life of projects commissioned until March 31, 2024.

The pre-fixed levelized tariff would be the ceiling tariff for the competitive bidding process. The power purchase agreement (PPA) will be for 25 years for all projects covered under the program.

The state regulator also noted that the renewable energy generator and the distribution licensee should fulfill all the technical requirements for synchronizing the project with the grid and comply with the PPA provisions.

The Madhya Pradesh Urja Vikas Nigam Limited (MPUVNL) had filed a petition with the Commission to determine feed-in-tariff for decentralized solar power projects having a capacity of 500 kW to 2 MW to be set up under Component A of the KUSUM program.


The State DISCOM said that MNRE had issued guidelines for implementing the KUSUM program on July 22, 2019, and it was designated as the state implementing agency for the program.

In its petition, MPUVNL explained that it had considered the capital cost as ₹35.06 million (~$481,148), operation and maintenance (O&M) expenses as ₹700,000 (~$9,606)/MW with an escalation of 3.84% per annum, capacity utilization factor (CUF) of 21%, and depreciation up to the loan period as 4.67% while computing the tariff. The useful life of the project was taken as 25 years.

Commission’s Analysis

The Commission considered a cost-plus tariff approach based on reasonable norms for determining solar power tariffs. It observed that the innovation in technology, higher system efficiency, improved O&M, and decline in EPC cost have decreased the solar power project capital cost for decentralized distributed solar PV power project. Accordingly, the capital cost of ₹33.5 million (~$459,740)/MW, excluding the land cost, was considered to determine the levelized tariff.

The project’s useful life was taken as 25 years, and the debt-equity ratio was considered 70:30 as claimed by MPUVNL. The CUF was set at 21% as requested by the petitioner, and the return on equity at 20% per annum for the useful life of the project.

The Commission considered the rate of depreciation as 4.67% per annum for a loan tenure of 15 years and 2% per annum for the balance period of project life after the loan repayment. The O&M expenses were put at ₹700,000 (~$9,606)/MW for the first year of the tenure, and the rate of escalation was fixed at 3.84%.

Madhya Pradesh_Variables Considered for Determining Tariff for Solar Projects under Component A of KUSUM Program

Based on the parameters mentioned above, the Commission determined the pre-fixed levelized tariff of ₹3.07 (~$0.042)/kWh.

Recently, the Jharkhand State Electricity Regulatory Commission set a pre-fixed levelized tariff of ₹3.09 (~$0.042)/kWh for power from decentralized solar and other renewable energy projects between 500 kW and 2 MW in size under Component-A of the KUSUM program.

Earlier, the Telangana State Electricity Regulatory Commission had set a levelized tariff of ₹3.13 (~$0.043)/kWh for solar projects between 500 kW and 2 MW.

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