Govt mulls no transmission charge for solar projects

Written by Noor Mohammad | Noor Mohammad | New Delhi | Updated: Aug 29 2011, 09:31am hrs
The government is considering exempting developers of solar mission projects from bearing electricity transmission charges and technical losses. If implemented, the policy will give a leg-up to solar power, which remains disadvantaged due to high costs of generation.

The government plans to provide this exemption to 1,000 mw capacity addition envisaged in the first phase of the Jawharlal Nehru National Solar Mission (JNNSM), which is expected to be completed by 2013. These benefits will be applicable to the solar power plants for their entire 25 year life, a senior government official said.

As per the proposal under consideration, national and state-level power transmission utilities will bear these charges and losses on behalf of developers and recover the same as part of their annual revenue requirement to be filed with the regulator.

The proposal has also found favour with the central electricity regulatory commission (CERC), which is mandated to frame regulations to promote solar power.

However, the centre will have to garner support of states for implementing the policy as it entails an extra financial burden for state power distribution companies.

The centre has envisaged adding 20,000 mw solar power generation capacity by 2022 under the three phases of the JNNSM.

Power distribution companies will have to mandatorily meet their electricity requirements from solar power plants starting from 0.25% in the financial year 2012-13 to 3% by 2022.

Under the first phase of JNNSM, power projects worth 7,00 mw have already been allocated for development in the first round of bidding. The process for the allocation of the balance capacity is likely to kick off soon. The ministry of new and renewable energy has already issued guidelines for the second round of auctioning.

The normative tariff fixed by the CERC for solar power plants is R17.50 a unit, compared to discoms average power purchase cost of R3.50 a unit. But electricity tariff for solar power plants has moderated in recent years on falling equipment prices. This has encouraged developers to submit offers of R13-12 a unit in the reverse bidding held for the allocation of JNNSM projects in the first round.