RERC Approves tariff of Rs. 3.04/KWh for 5,000 MW Under PM-KUSUM in Rajasthan

Rajasthan has taken another major step toward clean energy adoption! The Rajasthan Electricity Regulatory Commission (RERC) has approved 5,000 MW of decentralized solar power under Component A of the PM-KUSUM Scheme at a pre-fixed levelized tariff of ₹3.04/unit for the next 25 years. This decision is expected to boost solar energy deployment, reduce power purchase costs, and enhance renewable energy adoption in the state.

In this blog, we break down the key aspects of the order, concerns raised by stakeholders, and the way forward.

🔹 Background & Petition Details

The petition for this approval was filed by Rajasthan’s three electricity distribution companies (Discoms) – Jaipur Vidyut Vitran Nigam Ltd. (JVVNL), Ajmer Vidyut Vitran Nigam Ltd. (AVVNL), and Jodhpur Vidyut Vitran Nigam Ltd. (JDVVNL). Their goal was to secure approval for procurement of 5,000 MW of solar power under the government-backed Pradhan Mantri Kisan Urja Suraksha Evam Utthan Mahabhiyan (PM-KUSUM) Scheme.

Public notices were issued in leading newspapers, and hearings were conducted in February and March 2025 before the final order was released.

🔹 Key Highlights of RERC’s Approval

✅ Tariff Approved: ₹3.04/unit as the pre-fixed levelized tariff, which will also serve as the ceiling tariff for bidding.✅ Capacity Allocation:

• Jaipur Discom (JVVNL): 1,500 MW

• Ajmer Discom (AVVNL): 1,000 MW

• Jodhpur Discom (JDVVNL): 2,500 MW

  
  

  ✅ Project Duration: 25-year Power Purchase Agreements (PPAs) with developers.

  
  

  ✅ Capital Cost Considered: ₹2.69 crore/MW, based on prevailing solar module prices.

  
  

  ✅ Expected Benefits:

• Reduction in power purchase costs for Discoms.

• Improved Renewable Purchase Obligation (RPO) compliance.

• Increased availability of daytime solar power.

• Strengthening of grid voltage in rural areas.

  
  

🔹 Stakeholder Concerns & Discom Responses

While the order has been welcomed as a major push for renewable energy, several concerns were raised by stakeholders during public consultations.

1️⃣ Capital Cost & Tariff Viability

📌 Concern: Some stakeholders argued that the ₹2.69 crore/MW capital cost estimation was too low and did not account for real market conditions. Additionally, they claimed the ₹3.04/unit tariff was not viable for a 25-year project, especially given past approvals of higher tariffs (e.g., ₹3.50/unit for KUSUM-C).

🛠️ Discoms’ Response:

• The cost was determined based on current market rates for solar modules, which have declined in recent years.

• Competitive bidding under the earlier 1,000 MW allocation already resulted in tariffs below ₹3.04/unit, proving the feasibility of the rate.

  
  

2️⃣ Grid Stability & Energy Storage

📌 Concern: With an additional 5,000 MW of solar power being injected into the grid, stakeholders suggested integrating battery storage systems to manage excess energy and stabilize grid fluctuations.

🛠️ Discoms’ Response:

• Discoms are conducting grid studies and may consider energy storage solutions in the future.

• Institutions like MNIT Jaipur and IIT Jodhpur have been approached for conducting detailed system studies.

  
  

3️⃣ Loan & Financing Issues

📌 Concern: Banks are not providing 15-year loans for leased land projects, instead limiting them to 10 years, which increases EMI burden and reduces project viability.

🛠️ Discoms’ Response:

• The 15-year loan tenure was considered as per RERC regulations, and Discoms did not see the need for amendments at this stage.

  
  

4️⃣ Land Lease Rate Discrepancies

📌 Concern: Some stakeholders claimed the land lease rate of ₹80,000 per hectare/year (used for tariff calculation) was outdated, as land prices in some regions were significantly higher.

🛠️ Discoms’ Response:

• The ₹80,000 per hectare rate was approved by the Rajasthan government, and Discoms do not see a need for revision.

  
  

5️⃣ Implementation Challenges for Farmers

📌 Concern: Many farmers faced delays and complications in obtaining approvals, land leases, and grid connectivity.

🛠️ Discoms’ Response:

• Standard Operating Procedures (SOPs) have been implemented to streamline the process.

• The Chairman of Rajasthan Discoms has requested district collectors to facilitate approvals and support solar developers.

  
  

🔹 Final RERC Order & Directives

After evaluating all submissions, RERC approved the procurement of 5,000 MW of solar power under Component-A of PM-KUSUM at ₹3.04/unit with the following conditions:

🔹 Ceiling Tariff for Bidding: ₹3.04/unit will serve as the maximum tariff in case competitive bidding is required.🔹 Mandatory Grid Studies: Discoms must analyze grid impacts and explore storage solutions.🔹 Implementation Monitoring: Discoms should streamline project execution and ensure transparency.🔹 Future Tariff Review: If required, Discoms can approach RERC for tariff revisions.

🔹 The Road Ahead

While this decision is a big win for Rajasthan’s solar growth, the successful execution of these projects will be key to ensuring their long-term impact. The focus now shifts to:

✅ Smooth implementation and project approvals to avoid delays.

✅ Grid integration and energy storage solutions to manage fluctuations.

✅ Ensuring fair financial models so that developers can sustain operations for 25 years.

With 5,000 MW of new solar capacity, Rajasthan is set to solidify its position as a renewable energy leader in India. However, constant monitoring, fair execution, and proactive policymaking will be crucial to maximizing the benefits of this initiative.