Rajasthan Proposes Purchase of Excess Power Generated by Solar Pumps at ₹3.44/kWh

The rate for purchase of excess power by DISCOMs from decentralized ground-mounted and grid-connected renewable power projects will be ₹3.14/kWh under KUSUM Program

September 16, 2019


The Rajasthan Electricity Regulatory Commission (RERC) has issued a draft order inviting suggestions and comments for to determine pre-fixed levelized tariff and the rate of purchase of excess electricity by the distribution companies (DISCOMs) under the government’s KUSUM program that aims to solarize India’s agriculture. The last date for expressing views and suggestions is September 23, 2019.

The draft order pertains to component A and C of the KUSUM program. The program has been divided into three components and aims to add a solar capacity of 25,750 MW by 2022.

  • Component A under the program includes the installation of 10,000 MW of decentralized ground-mounted and grid-connected renewable power projects.
  • Component B will be the installation of 1.75 million standalone solar-powered agriculture pumps.
  • Component C is solarization of 1 million grid-connected solar-powered agriculture pumps.

Under the Pradhan Mantri Kisan Urja Suraksha evem Utthan. Mahabhiyan (PM KUSUM) program, component A and C will be implemented as pilot projects while component B will be fully implemented with the total support of ₹190.4 billion (~$2.65 billion) from the central government.

Rajasthan Urja Vikas Nigam Ltd (RUVNL) on behalf of DISCOMs has requested the commission to determine the pre-levelized tariff under component-A and the rate of purchase of excess electricity by DISCOMs under component-C of the program.

The draft order states that after the successful implementation of the pilot project under component-A and component-C, it will be scaled up with necessary modifications with the central government’s assistance of ₹153 billion (~$2.12 billion).

All three components of the program will get total central financial support of ₹342 billion (~$4.77 billion).

Under the first component, individual farmers, cooperatives, panchayats, farmer producer organizations (FPO) will install renewable power projects of 500 kW to 2 MW on their barren or cultivable lands.

States may also allow setting up of solar or other renewable energy-based power projects of capacity less than 500 kW in specific cases.

The DISCOMs will notify sub-station wise surplus capacity which can be fed from such projects to the grid and will invite applications from interested beneficiaries for setting up renewable energy projects. The renewable power generated will be purchased by DISCOMs at a pre-fixed levelized tariff.

Given the large differences between regulated feed-in-tariffs/preferential tariffs and the winning bids for solar PV and wind in the past, the CERC has stopped notifying wind and solar PV tariffs since the last two years.

Therefore, the state commission had determined the last generic tariff for solar PV projects for the year 2017-18 as ₹3.93 (~$0.155)/kWh.

However, to arrive at the pre-fixed levelized tariff for projects under KUSUM, the commission considered the solar tariffs notified by the Karnataka Electricity Regulatory Commission (KERC) and Tamil Nadu Electricity Regulatory Commission (TNERC).  KERC in its order had stated that the generic tariff for grid-connected MW-scale solar power projects of less than 5 MW capacity at ₹3.08 (~$ 0.042)/kWh considering the capital cost of ₹34 million (~$500,000)/MW and operation and maintenance expenses of ₹450,000 (~$6,500).

Tamil Nadu Electricity Regulatory Commission (TNERC) had set a tariff of ₹3.04 (~$0.042)/kWh without accelerated depreciation and ₹2.80 (~$0.043)/kWh with accelerated depreciation.

Keeping these in consideration, the commission has decided pre-fixed levelized tariff under component-A at ₹3.14 (~$0.04378)/kWh.

The duration of PPA will be 25 years for all projects covered under this project.

Under component C, the central financial assistance (CFA) of 30% of the benchmark cost or the tender cost, whichever is lower, will be provided. Apart from the CFA, the state government will give a subsidy of 30%, and the farmer will provide the remaining 40%. In case the state government provides subsidy more than 30%, the beneficiary share will reduce accordingly. This component will apply to farmers that are already connected to the grid.

The rate for purchase of excess power by DISCOMs from grid-connected solarized agriculture pumps (component-C) will be ₹3.44 (~$0.047)/kWh.

The tariff mentioned in the draft order will be applicable for the capacity initially allocated to the state by the MNRE under the component-A and the number of consumers under the component-C of the program.

The commission has also proposed that the DISCOMs may explore the feasibility of grid-connected solarized agriculture pumps of lower capacity and limited hours of use to make full use of the CFA. The commission also suggested that it may be prudent that DISCOMs try out Component-C in different agro-climatic zones within Rajasthan

Recently, the Ministry of New and Renewable Energy (MNRE) launched the guidelines for the implementation of Pradhan Mantri Kishan Urja Suraksha evam Uthan Mahabhiyan program (PM KUSUM) on July 22, 2019.

The recent changes in the KUSUM program have brought some conflicting views to the fore. For instance, system integrators of solar water pump systems have raised concerns about the KUSUM program allowing only manufacturers to participate in tenders. According to system integrators, they play a crucial role in the solar pump industry, and this move by the MNRE could have negative ramifications for the industry at large.

On the other hand, the Indian Solar Manufacturers Association (ISMA), has expressed its support to the government’s decision to utilize indigenous cells and modules in the implementation of the program.

Image credit: Claro Energy