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Residents of Chandigarh, Himachal Pradesh, Puducherry and Uttarakhand will be able to buy solar power at Rs 3 per unit – the lowest tariff in India – from panels installed on their rooftops without having to shell out a penny. 

 

The solar panels will be set up by third parties, which will sell power at these prices in the two states and two Union Territories. 

 

The Solar Energy Corporation of India, a government-owned company that has the mandate to develop the renewable energy sector, had sought bids for setting up 200 MW of solar panels on rooftops in the country to sell power to residents of buildings. 

 

Bids in Himachal and Uttarakhand and the Union Territories of Chandigarh and Puducherry were the cheapest, while they were the costliest in Gujarat. 

 

“The bidders have been able to quote such low prices because the government has decided to offer subsidy to special category states,” a senior power sector official said. The subsidy is to the extent of Rs 52.5 per watt of installed capacity for the special category states, including the four regions, the official said. 

 

The electricity generated from rooftop solar panels in these four regions would cost less than the power sold by the respective state distribution companies. The highest tariff of Rs 6.12 per unit was quoted for Gujarat, followed by Rs 5.92 per unit for Chhattisgarh and Rs 5.55 per unit for Tamil Nadu. 

 

These are general category states where the subsidy on installation has been fixed at Rs 22.5 a watt. Among general category states, the lowest bid was Rs 4.46 per unit for Maharashtra. 

 

The government plans to set up 18 MW of solar rooftop capacity in Uttar Pradesh, the largest state, where the lowest tariff inclusive of subsidy was quoted at Rs 5.47 per unit. 

 

According to ICRA, the rate of return for a bidder in this model depends on tariff, capital cost and capacity utilisation. 

 

“Implementation of such projects by the bidders within a stipulated timeline – 12 months from date of allocation – remains critical, given the clause of liquidated damage for delay,” said Sabyasachi Mazumdar, senior vice president at ICRA. 

 

“Further, the ability to maintain the operating performance within the stipulated parameters remains crucial for the bidder, both for recovery of subsidy as well as the performance bank guarantee from SECI.”

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