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HPERC Hikes Levelized Tariff By 10-11% For 1-5 MW Solar Projects For FY 2022-23

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The Himachal Pradesh Electricity Regulatory Commission (HPERC) has published a general levelized price for solar projects up to 5 MW for the fiscal year 2022-23, an increase of 10-11% over the previous fiscal year.

HPERC has established the normative capital cost for solar projects with capacities up to 1 MW in regions outside urban and industrial areas at Rs 42.23 million/MW. The capital cost of projects larger than 1 MW and up to 5 MW is Rs 42.59 million/MW. This is a 13% increase over the previous year.

The normative capital cost of Rs 44.24 million/MW is considered for solar projects of capacity up to 1 MW put up in urban and industrial locations, while Rs 43.59 million/MW is considered for solar projects of the capacity of 1 MW to 5 MW. The price has risen by 12.7% over the previous year.

The rise in levelized tariffs would assist the state’s renewable project developers to cope with growing module prices, GST rates, and the approaching BCD execution.

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The Commission noted that an increase of 30% in the normative cost of solar modules is being evaluated by the Commission, with a 15% escalation subject to adjustment according to changes in the tax rate.

Concerning the suggestion to provide a breakdown of increased module costs due to Goods and Services Tax (GST) and Basic Customs Duty (BCD), the Commission stated that it is willing to reflect the GST and BCD components under a separate item, which will also enable alteration in the event of GST and BCD variation.

The impact of the extra taxes, which include the GST rise from 5% to 12% and the replacement of 14.5% safeguard duty with 40% BCD, will be included in the normative capital cost.

To establish the rate in accordance with the Central Electricity Regulatory Commission’s (CERC) regulations, the Commission used the normative capacity utilization factor (CUF) of 21%.

The Commission authorized a debt-equity ratio of 70:30 and a return on equity of 14% for computing the tariff.

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For the first 15 years, the depreciation rate was calculated to be 4.67%, and the rate of depreciation from the 16th year onwards would be spread out throughout the remaining useful life.

The O&M charges for the fiscal year 2022-23 have been fixed at Rs 943,000/MW. Over the tariff term, the O&M rates will also be increased at a rate of 3.84% each year.

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