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Tamilnadu Regulatory Commission Revises Solar Tariff According To CERC Methodology

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Reecently Tamilnadu Electricity Regulatory Commission (TNERC) revises solar tariff for Welspun Energy from 5.61 to 5.68 INR/Kwh without accelerated depreciation (AD).

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Petitioner M/s Welspun Renewable Energy Pvt Ltd, presently M/S Walwhan Energy and National Solar Energy Federation Of India Ltd (NSEFI), petitioned to Appellate Tribunal For Electricity (APTEL) for the revision of TNERC’s tariff calculation procedure for 2016-17.

APTEL by its order dated 11.11.2019 in the A.Nos 118 & 151 of 2016 find out the following findings :

i.Capital Cost : APTEL found TNERC’s capital cost calculation was not in term of CERC’s tariff determination methodology. Accordingly, APTEL directed commission to follow the CERC’s final order on benchmark capital cost for discovery of fair tariff.

ii.Depreciation : TNERC erroneously calculated depreciation cost of plant by adopting straight line method. APTEL directed TNERC to re compute depreciation by methodologies followed by all other SERC & CERC.

iii.Spares : In the absence of cost for maintenance spares while calculating the working capital, APTEL directed commission to compute the tariff by factoring cost for maintenance spares.

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iv.Degradation Of Module : It has been directed to factor in module degradation & reduction of generation while calculating the levelized tariff.

v.Return on Equity (RoE): The tribunal directed commission to re determine the tariff to ensure that the levelized tariff ensures recovery of the revenue permissible to the developers during the plant’s life cycle. The permissible revenues mean revenues that will deliver a pre tax ROE of 20% to the developers.

Henceforth, commission filed a civil appeal to Supreme Court of India against the APTEL judgement on re determination of solar tariff. Further Supreme Court Of India dismissed and left open all issues.

In view of present scenario, Tamilnadu commission passess an order with revised solar tariff according to CERC’s principle & methodologies for levelized tariff determination.

Tariff ComponentsSolar PV
Capital costRs 5.3 Cr/MW
CUF19%
O&M expensesRs 7 lakhs with escalation at 5.72% per annum from 2nd year
Insurance cost0.35% of net asset value
Debt : Equity ratio70:30
Term of loan10 years + 1 year moratorium
Interest on loan13%
Life cycle of plant25 years
Working capita components1 month O&M cost & 2 months receivables, maintenance spares 15%
Interest on working capital13.5%
RoE20% pre tax
Depreciation5.83% for first 12 years and 1.54% from 13th years onward
Aux Consumption
Discount factor10.21%
Levelized tariff without AD5.68
Levelized tariff with AD5.10

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