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Gujarat wants cut in solar power tariff

According to reports, the state government has approached the Gujarat Electricity Regulatory Commission (GERC) seeking a reduction in the solar power tariff, citing unwanted and windfall gains to the solar project developers.

The Gujarat Urja Vikas Nigam Limited (GUVNL) had signed 25-year power purchase agreements for 971.5 MW of solar power with 88 developers. The developers were offered Rs15 per unit for the first 12 years, and Rs5 per unit for the next 13 years. It is currently buying around 860 MW of solar power.

The project developers are receiving levelised tariff of Rs12.54 per unit.
However, GUVNL has approached the regulator, pressing for a sharp reduction in the tariff. A copy of the petition is with dna.

GUVNL’s petition mainly rests on the fact that the existing tariff was calculated by GERC on an assumption that developers would be incurring a capital cost of Rs16.50 crore for every MW of solar power capacity. However, weighted average of capital costs incurred by developers for establishing the projects is around Rs12 crore per MW. It has mentioned in the petition that developers are receiving levelised tariff of Rs12.54 per unit as against a reasonable and prudent tariff of around Rs9 per unit.

“The increased tariff of Rs3.54 per unit is a direct burden on consumers and is an unwanted, unjustified and windfall gain to project developers,” said GUVNL in the petition.

A senior GUVNL official said that the current outgo (on buying solar power) is quite high, and having a levelised tariff will help them in managing cash flows better.

The project developers, meanwhile, have their fingers crossed.

“First of all, we have to see if GERC even admits GUVNL’s petition. We have sought legal advice, and take steps to contest GUVNL’s proposal,” said a project developer on the condition of anonymity.

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