CERC Cuts Tariff To Rs 2.68/Unit Vs Rs 3.22/Unit Claimed For Kerala Floating Solar

Highlights :

  • While the refusal to consider module degradation is understandable as it was not present in original bid, the cut on O&M costs is likely to pinch.
CERC Cuts Tariff To Rs 2.68/Unit Vs Rs 3.22/Unit Claimed For Kerala Floating Solar

Kerala’s 90 MW Kayamkulam Floating Solar plant, owned by NTPC saw a final levelised tariff of Rs 2.68/unit approved by the CERC, versus the claim for Rs 3.22/unit claimed by NTPC.

KSEBL had sought the determination of the final tariff for the 92 MW project, while expressing concerns over the provisional tariff of ₹2.94/kWh determined by CERC.

KSEBL argued against NTPC’s cost claims, including infrastructure costs such as a ₹50.77 crore motorable road that had not been constructed. KSEBL proposed that alternative and economical solutions for plant access should be explored. It also questioned the inclusion of module degradation and elevated operational & maintenance (O&M) costs in NTPC’s tariff calculations.

KSEBL highlighted that no equity had been infused by NTPC and emphasized the absence of regulatory provisions for certain claimed costs, like module degradation. It argued for strict prudence checks to safeguard the interests of consumers.

NTPC filed this petition to finalize the project-specific levelized tariff. NTPC proposed a tariff of ₹3.22/kWh and requested allowances for force majeure-induced delays caused by the COVID-19 pandemic, local issues, and disruptions in the supply chain.

NTPC highlighted additional expenses, including ₹50.77 crore for constructing a 7 km motorable road, which it deemed essential for plant security and maintenance. NTPC justified increased O&M costs due to challenges unique to floating solar plants, such as module cleaning due to migratory birds, saline water-induced corrosion, and theft issues. It also requested consideration of module degradation in tariff calculations at the rate of 0.7% per annum.

Background:

    • The project, comprising 22 MW and 70 MW phases, is a floating solar SPV plant set up under a Memorandum of Understanding (MoU) signed in 2018 between KSEBL and NTPC. The provisional tariff was set at ₹2.94/kWh, subject to adjustments post-commissioning.

Following project commissioning on 24 June 2022, disputes arose over cost claims, delays, and tariff adjustments.

Key Issues Debated:

  • Provisions for force majeure and their applicability in waiving certain cost claims.
  • Inclusion of unexecuted infrastructure costs (e.g., motorable roads) in tariff calculations.
  • O&M cost benchmarks and claims of equity infusion by NTPC.

Consideration of module degradation and system unavailability in computing tariffs.

Commission’s Approach:

The CERC deliberated both petitions together, with hearings and additional submissions scheduled for detailed scrutiny of costs and claims. NTPC was directed to submit comprehensive data on project costs, delays, and justifications for deviations. Based on the data submitted, CERC detailed its concurrence and differences with NTPC as below:

CERC working of Kayamkulam floating solar plant

The Final Word From CERC

 

The order will come as a disappointment to NTPC, as the final tariff taken on record is a full 16% below its claims. Floating solar plants, especially like the one under consideration in brackish and salty waters remain a relatively unknown quantity in terms of performance, and especially O&M costs, in the long run. CERC has cut down those as well, leading one to wonder just how profitable the project will be for NTPC in the long run.

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