Why CERC Slashed NTPC Green's Levelized Tariff For Ayodhya Solar Project?

The Central Electricity Regulatory Commission (CERC), in its latest order, has slashed the levelised tariff of a solar project developed by NTPC Green Energy Limited (NGEL) in Ayodhya. The matter came to light after the listed government entity approached the central power regulator for the adoption of a tariff for its 40 MW solar project in Ayodhya, which was commissioned in two phases in 2024.

In its order, CERC approved a levelised tariff of ₹3.36 per kWh, lower than the ₹3.98 per kWh sought by the developer. While NGEL had argued on several fronts to justify its proposed tariff, the Commission, after hearing all stakeholders—including the local discom Uttar Pradesh Power Corporation Limited (UPPCL), UPNEDA, and others—reduced the tariff, citing counter-arguments.

Background of the Case

NTPC Green developed the project under the CERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2024. This followed the Uttar Pradesh Electricity Regulatory Commission (UPERC) declaring the project a fit case for relaxing the requirement of procurement through competitive bidding.

Following Are the Key Facts of the Case

NTPC Green’s Arguments

NTPC Green argued that its tariff claims were based on several on-ground challenges that escalated project costs. The company said the site posed unique challenges as it was located on submerged land, requiring additional civil engineering measures. These included increased design clearances and higher metallic module support foundations to protect equipment from flooding, which led to higher investments.

The company also highlighted lower solar irradiance levels in Ayodhya compared to states such as Gujarat and Rajasthan. This, it argued, could reduce the anticipated Capacity Utilisation Factor (CUF), making tariff comparisons with projects in those states inappropriate. While NTPC Green initially sought a tariff of ₹3.88 per kWh, it later revised the request to ₹3.98 per kWh.

UPPCL Contests

The local utility, UPPCL, contested several of NGEL’s claims. For instance, NGEL sought to include ₹20.71 lakh as compensation paid for relocating families from the allotted land. UPPCL argued that there was no regulatory provision for such inclusion, although CERC ultimately allowed the expenditure.

NGEL also requested a 0.7% annual degradation factor and a 1.235% system unavailability margin. These were rejected by the Commission, which cited the absence of such provisions in the Renewable Energy Tariff Regulations, 2024.

CERC further declined to entertain NGEL’s plea for including separate charges for the transmission line and for capping the escalation rate at 5.25% from the fourth year onwards in Operations and Maintenance (O&M) expenses.

Final Verdict of CERC

CERC’s final verdict was based on its assessment of a net capital cost of ₹201.45 crore for the 40 MW project, translating to ₹503.62 lakh per MW. This was lower than NTPC Green’s claimed project cost of ₹212.97 crore.

“Based on the parameters, assumptions, and methodology outlined in the earlier paragraphs for the 40 MW Solar PV Project, the levelised tariff works out to ₹3.36 per kWh. Accordingly, as against the Petitioner’s claim of ₹3.98 per kWh, the Commission approves the levelised tariff of ₹3.36 per kWh,” the CERC order stated.