National Electric Power Regulatory Authority on Wednesday announced around 25 percent cut in upfront solar tariff.
The new upfront solar tariff will be between 11.35 to11.53 cents (US) per kilowatt per hour for North region, while for South it would be between 10.72 to 10.89 per kilowatt per hour for projects varying between 1-100MW.
According to officials, the tariff of North region has been kept high as less electricity is produced in hilly areas of North, while same set up produces more electricity in Punjab and Sindh due to plenty of sunshine. The first upfront tariff for solar PV power plants was determined in January 2014, in which, projects up to 50MW, were granted levelized tariff of US cents 16.30/kWh for South and US Cents 17.00/kWh for North with a validity period of six months.
In the second tariff, which is applicable presently, the authority fixed 14.15 to 15.02 cents per kilowatt for 1-20MW, 20-50MW and 50-100MW projects. It is set to expire on 31st December 2015.
In the previous upfront solar tariffs, annual degradation of 0.7% from year 2 to 25 was allowed, but in new tariff considering better quality solar modules, 0.5% annual degradation from year 2 to 25 has been approved.
The authority has applied 3.62% levelized degradation to EPC cost under the new pricing, along with enhancing the capacity utilization factor of 18% for South region and 17% for North region.
In the previous upfront tariff, excess energy beyond the benchmark capacity factors was shared between the power producer and the power purchaser in the ratio of 75:25 for 1st 1% and 80:20 for the 2nd 1%. The Authority has revised this ratio to 80:20 and 90:10. This step is expected to promote investment in better technologies. Authority believes that the new upfront tariff will provide certainty to the investors willing to install solar plants in the form of certain tariff structure, returns and short processing time for grant of tariff.
The new upfront tariff will be applicable from January 1, 2016 and will remain valid for a period of 6 months.