Falling tariff takes sheen off rooftop solar plants

BENGALURU: Karnataka might have set itself an ambitious target of 2,400MW for grid-connected rooftop generation projects by 2021, but the going seems to be slow in eight districts coming under the jurisdiction of the Bangalore Electric Supply Company (

Bescom

). The number of new

rooftop solar plants

installed in the region is falling every year: from an all-time high of 521 in 2016-17 to 81 in 2018-19 (till December 31, 2018).

According to data published by Bescom on its website, there were 27 plants commissioned in 2014-15, 399 in 2015-16 and 521 in 2016-17. After the all-time high in 2016-17, the number almost halved to 290 in 2017-18 before dropping to 81 this year.

While the actual numbers have dropped sharply, the capacity of the newly installed plants only fell marginally from 44.68MW in 2016-17 to 41.13MW in 2017-18. In 2018-19, however, the newly installed capacity of 6.10MW, was lower than the 2015-16 levels of 7.56MW.

A reason could be simultaneous slashing of tariff paid by Escoms to domestic consumers for exporting energy to their grid for a 25-year period.

“When the project started in 2014, the tariff paid to consumers was Rs 9.56 per unit which was very high, especially when compared to other states. However, since the capital cost of installing panels reduced over the years, tariff too dropped (Rs 3.5 now),” said an official.

The Karnataka Electricity Regulatory Commission (KERC) had first reduced tariff in May 2016 for

solar plants

of 1KW to 10KW capacity (without subsidy) from Rs 9.56 per unit to Rs 7.08 per unit. Two years later in May 2018, it once again revised tariff downwards to Rs 3.56 per unit. However, it soon backtracked on this move, and increased tariff marginally from Rs 3.56 to Rs 4.15 per unit in December 2018.

“One of the reasons for poor response for installation of rooftop solar photovoltaic plants by domestic consumers may be low feed in tariff (FIT) fixed by the commission as compared to the relatively higher capital cost of smaller capacity of units. The commission was of the view that there is a need to promote smaller capacity solar rooftop power plants by domestic consumers to achieve the desired capacity,” KERC stated in its December 19 order.

Of the 1,319 rooftop plants installed over the past five years, with a cumulative capacity of 100MW, 989 were done by residents, 223 by commercial establishments and 107 by industries.

“Since residences require much lesser power, though their numbers may be higher, the installed capacity of these 989 plants is only 12-13MW of the total 100MW. The remaining 87MW is generated by plants installed for commercial and industrial purposes,” said the officer.

According to energy expert MG Prabhakar, only those who are determined to go green at any cost will be interested in taking up the project, as otherwise it doesn’t make much sense economically.

“In Bengaluru, each KW of installed energy will give consumers 5 units per day. So on a yearly basis, at a tariff rate of Rs 4.15 per unit, a domestic consumer with a 1KW plant will get approximately Rs 7,500 if they export all of their energy to the grid. Since the capital cost to set up a plant is Rs 60,000 apart from maintenance and operation costs, they will be able to recover money only in 7-10 years,” he said.