The Punjab State Electricity Regulatory Commission (PSERC) has approved Punjab State Power Corporation’s (PSPCL) power purchase agreement (PPA) to procure 4 MW of intra-state solar power from the Water Resources Department.

The Commission approved a tariff of ₹2.97 (~$0.0311)/kWh.

However, the Commission clarified that it was not approving the other terms and conditions of the PPA or the power sale agreement (PSA). Those terms, it said, must align with the standard bidding documents or be mutually agreed upon by the contracting parties.

Background

PSPCL filed a petition seeking approval to procure power from a 4 MW intra-state solar project being developed by the Water Resources Department, Punjab.

PSPCL submitted that it is engaged in the generation and distribution of electricity in Punjab and procures power from different sources, including renewable sources, to meet supply requirements and renewable purchase obligations.

The Water Resources Department floated a tender for the implementation of the project, with 21% capacity utilization factor on the AC side, including five years of operation and maintenance.

PSPCL proposed to procure power at a levelized tariff of ₹2.97 (~$0.0311)/kWh, the same tariff under which its last agreement for a similar intra-state solar project was signed. The department accepted this tariff.

PSPCL argued that the tariff would remain fixed for the full 25-year term and that a performance guarantee of ₹4 million (~$41,762), calculated at ₹1 million (~$10,441)/MW, had been furnished by the developer.

PSPCL further argued that the tariff was aligned with the ₹2.97 (~$0.0311)/kWh tariff approved for procurement from SAEL’s 400 MW solar project in 2024.

It also stated that the same tariff had been approved as the Feed-in Tariff for the financial year 2026-27 for accounting solar power under rooftop, net-billing, and gross metering arrangements.

PSPCL also submitted that the proposed tariff was below the applicable ceiling tariff of ₹3.10 (~$0.0323)/kWh in its recent tender to procure 1 GW of intra-state solar power from projects of 1-5 MW.

The Water Resources Department supported PSPCL’s request and stated that the solar project was a pilot aimed at using canal bank land for clean, sustainable energy generation.

Commission’s Analysis

The Commission referred to Regulation 16 of the Framework for Resource Adequacy Regulations, 2024, which requires a distribution licensee to enter into new capacity arrangements or tie-ups to satisfy the primary criteria of necessity, reasonability of cost, and conformity with the State Government’s policy directives and policies issued by the Government of India.

The Commission observed PSPCL was striving to meet even its existing renewable purchase obligation targets. It held that the proposed procurement of intra-state renewable energy, especially at the distributed level, met the criteria of necessity and compliance with government policy.

PSERC noted that the proposed tariff of ₹2.97 (~$0.0311)/kWh was reasonable and aligned with market forces. It also noted that the tariff matched the Feed-in Tariff approved for FY 2026-27 for accounting solar power injection through rooftop, net-billing, and gross metering arrangements in Punjab.

Accordingly, the Commission approved PSPCL’s PPA for the procurement of 4 MW of solar power.

Last month, PSERC approved the long-term procurement of firm, dispatchable renewable energy by the Punjab State Power Corporation from NHPC.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.