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Karnataka tariff change upsets investors

INDIA: The Karnataka state electricity regulator has reduced the feed-in-tariff for wind from INR 4.50/kWh ($0.07kWh) to INR 3.73/kWh ($0.058/kWh) putting roughly 600MW of projects in jeopardy.

New projects in Karnataka face lower than expected feed-in tariff rates
New projects in Karnataka face lower than expected feed-in tariff rates

The earlier tariff of INR 4.5/kWh was expected to be applicable until March 2018.

The new regulatory order stipulates the new tariff will be applicable for all new projects with power purchase agreements (PPA) signed after 4 September and even for commissioned projects with PPAs not signed off by the regulator.

Under normal process, regulatory approval of a PPA is a mere formality but with the change, investors of about 600MW commissioned capacity (of which 273MW is supplying power to the grid) now find themselves staring at unanticipated losses.

Ironically, the regulator has justified the tariff change by citing the low tariffs from the federal auctions. It has also cited higher operational hub heights than those used in tariff estimation as a reason for the reduction in tariff.

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