RERC Approves INR 3.04/kWh Tariff for 5,000 MW Solar Under PM-KUSUM

The Rajasthan Electricity Regulatory Commission (RERC) has approved a tariff of INR 3.04 per unit for 5,000 MW of decentralised solar power projects under Component-A of the PM-KUSUM Scheme.

This pre-fixed levelised tariff will remain applicable for 25 years and is expected to drive large-scale solar adoption, lower power purchase costs, and strengthen renewable energy deployment in the state.

The approval follows a petition filed by Rajasthan’s three state electricity distribution companies (Discoms) viz. Jaipur Vidyut Vitran Nigam Ltd. (JVVNL), Ajmer Vidyut Vitran Nigam Ltd. (AVVNL), and Jodhpur Vidyut Vitran Nigam Ltd. (JDVVNL). The petition sought approval for procuring solar power under the central government’s Pradhan Mantri Kisan Urja Suraksha Evam Utthan Mahabhiyan (PM-KUSUM) scheme. Public notices were issued, and hearings were conducted in February and March 2025 before the final order was passed.

Under the approved capacity allocation, JVVNL will procure 1,500 MW, AVVNL will secure 1,000 MW, and JDVVNL will acquire 2,500 MW. Developers will sign 25-year power purchase agreements (PPAs), ensuring long-term stability. The capital cost for these projects has been estimated at INR 2.69 crore per MW, factoring in current solar module prices.

The implementation of this initiative is expected to bring multiple benefits, including a reduction in power procurement costs for Discoms, improved compliance with Renewable Purchase Obligations (RPO), better grid voltage regulation in rural areas, and increased daytime solar power availability.

However, the order also faced scrutiny during public consultations. Concerns were raised regarding the estimated capital cost, viability of the INR 3.04/unit tariff, grid stability, energy storage requirements, financing challenges, land lease rates, and implementation delays for farmers.

Some stakeholders argued that the capital cost assumption of INR 2.69 crore/MW was underestimated and that the tariff might not be sustainable over a 25-year period, given previous approvals of higher tariffs such as INR 3.50/unit for PM-KUSUM Component-C. In response, the Discoms clarified that the tariff was based on recent bidding trends where prices had already fallen below INR 3.04/unit, making the approved rate feasible.

Another major concern was grid stability, with suggestions for integrating battery storage systems to manage excess power generation. Discoms responded by stating that grid studies are being conducted and that institutions such as MNIT Jaipur and IIT Jodhpur have been approached for further analysis. They acknowledged that energy storage solutions could be considered in future phases.

Financing constraints were also highlighted, particularly regarding banks’ reluctance to offer 15-year loans for projects on leased land, instead limiting loan tenure to 10 years. Discoms maintained that the 15-year loan term was in line with RERC regulations and did not warrant immediate amendments.

Additionally, the INR 80,000 per hectare annual land lease rate used in tariff calculations was contested, with claims that land prices in certain regions were significantly higher. Discoms defended the estimate, stating that it was an approved benchmark set by the Rajasthan government.

Farmers also reported delays in obtaining approvals, securing land leases, and accessing grid connectivity. To address these issues, Discoms have implemented Standard Operating Procedures (SOPs) to streamline the approval process. District collectors have been urged to facilitate project clearances and provide necessary support to solar developers.

Following a detailed review, RERC approved the procurement of 5,000 MW of solar power at INR 3.04/unit while incorporating certain conditions. The tariff will serve as the ceiling price for future competitive bidding, and Discoms have been directed to conduct mandatory grid impact studies and explore storage solutions. Additionally, they must ensure transparent implementation and can seek tariff revisions in case of significant market changes.

This decision represents a significant milestone for Rajasthan’s renewable energy landscape. However, the focus now shifts to the successful execution of these projects, ensuring timely approvals, seamless grid integration, and financial viability for developers. As Rajasthan moves towards solidifying its position as a clean energy leader, continuous monitoring and adaptive policymaking will be critical to maximising the benefits of this initiative.