CERC ENDORSES CAPITAL COST FOR SOLAR TO A NEW LOW

The Central Electricity Regulatory Commission (CERC) annually reviews the benchmark capital cost norm for solar PV power projects as per the proviso of Regulation 5 of “RE Tariff Regulations, 2012”.

On March 23, 2016, the CERC determined the Benchmark Capital Cost for ground-mounted solar PV power for the financial year 2016–17 at Rs 530.02 lakh/MW. The component-wise breakup for the benchmark cost is given in Table 1 for the year 2016–17. In comparison to last year’s cost breakup, all component costs have been brought down. This year’s cost is ~13 per cent lower than last year’s benchmark of Rs 605.85 lakh/MW, which itself was a step down by ~12 per cent from the 2014–15 benchmark cost of Rs 69,109 lakh/MW.

The tariff for solar PV is devised as per the “Tariff Structure” defined in the proviso 9 of the regulation.

The tariff for renewable energy technologies shall be single part tariff consisting of the following fixed cost components:

(a) Return on equity; (b) Interest on loan capital; (c) Depreciation; (d) Interest on working capital; (e) Operation and maintenance expenses

The tariff for the year 2016–17 as mentioned in the tariff order was determined as Rs 5.68 /kWh, which is an almost 20 per cent drop from Rs 7.04/kWh in 2015–16.

These cost reductions indicate increased viability of solar PV power in near future and bring a positive note to the growth of the solar PV sector in the country.

Information compiled by Mr Adwit Kashyap, Research Associate, RETA, TERI, New Delhi. Email: Adwit.Kashyap@teri.res.in; and Mr Abhinav Jain, Research Associate, RETA, TERI, New Delhi. abhinav.jain@teri.res.in.