Indexed renewable energy tariffs can provide savings for discoms

According to a study by Institute for Energy Economics and Financial Analysis (IEEFA) and CEEW-Centre for Energy Finance (CEF), indexed (inflation linked) renewable energy tariffs can save India’s discoms up to Rs 218.80 billion over the next five years.

Inflation indexation of tariffs for future solar capacity could provide much-needed financial respite to the distressed power distribution sector and help India move away from coal-fired power. As per the study, solar tariffs start at Rs 2 per kWh for the first year of the 25-year PPA, rising at an indexed rate of 2.2 per cent of annual inflation for 15 years and then at a flat rate of zero per cent for the remaining life of the contract. Flat solar tariffs would decline at just 2.5 per cent year-on-year for the next five years, reaching Rs 2.13/kWh by 2025-26.


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