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CERC Clears Rs 3.36/kWh Tariff for NTPC Green’s 40 MW Ayodhya Solar Project After Cost Review

The Central Electricity Regulatory Commission (CERC) has approved a levelized tariff of Rs 3.36 per kWh for NTPC Green Energy Limited’s (NGEL) 40 MW solar power project in Ayodhya, Uttar Pradesh, after undertaking a detailed assessment of capital costs, operating expenses, and technical parameters.

The tariff approval followed CERC’s examination of revised project costs, partial acceptance of operations and maintenance (O&M) expenses, and the rejection of certain assumptions related to module degradation and system losses proposed by NGEL.

Project Background

NGEL had entered into a memorandum of understanding with the Uttar Pradesh government to develop 300 MW of solar capacity as part of the Ayodhya solarization initiative. Of this, 40 MW was allocated to NGEL with land support from the state government.

Jakson Green emerged as the successful bidder for the engineering, procurement, and construction (EPC) contract for the project. Following regulatory clearance from the Uttar Pradesh Electricity Regulatory Commission (UPERC), NGEL signed a power purchase agreement with Uttar Pradesh Power Corporation Limited (UPPCL) for supplying electricity from the project.

The first phase of the project, comprising 14 MW, was commissioned in January 2024, while the remaining 26 MW became operational in July 2024.

Tariff Petition and Submissions

NGEL filed a petition before CERC seeking determination of project-specific tariffs under the Renewable Energy Tariff Regulations, 2024. The company proposed a capital cost of Rs 53.24 million per MW and assumed a capacity utilization factor (CUF) of 24.73%, auxiliary consumption of 0.75%, annual module degradation of 0.7%, and additional system losses of 1.25%.

NGEL stated that the project was entirely equity-funded but requested the application of the normative 70:30 debt–equity ratio for tariff computation. It also sought approval for O&M expenses of Rs 363,000 per MW annually for the first three years and Rs 413,000 per MW thereafter, including costs related to transmission line maintenance.

Additionally, NGEL requested inclusion of Rs 2.07 million spent on relocating families from the project land and sought flexibility to adjust costs if reimbursements for transmission infrastructure were not received.

UPPCL, however, raised objections to several assumptions. It argued that land lease expenses should be treated as capital costs, opposed compensation for land relocation, and contested the assumptions on receivables, degradation factors, and additional transmission losses. UPPCL submitted that the applicable levelized tariff should be closer to Rs 3.67 per kWh.

Commission’s Findings

After multiple hearings and detailed scrutiny, CERC accepted the normative 70:30 debt–equity structure and limited working capital by considering receivables for 45 days, in line with prevailing regulations. The Commission reduced the project’s capital cost to Rs 50.36 million per MW by disallowing certain components, though it permitted the inclusion of relocation compensation expenses.

While CERC approved the proposed CUF and auxiliary consumption levels, it rejected the assumptions related to module degradation and additional transmission losses, citing the absence of regulatory provisions. The Commission accepted NGEL’s O&M cost estimates but disallowed dedicated transmission line O&M expenses due to insufficient justification.

Based on these adjustments, CERC approved a final levelized tariff of Rs 3.36 per kWh for the 40 MW Ayodhya solar project.