The tariff concerning the procurement of power by distribution licensees and others from solar projects in Gujarat has been established for a project life of 25 years. The Commission has introduced an accelerated depreciation benefit of Rs 0.28/kWh and a net tariff of Rs 2.48/kWh.

The benchmark normative capital cost for solar projects below the eligibility threshold for the bidding process has been set at Rs 30.5 million/MW. This determination followed the observation that the tariff discovered in competitive bidding by the Gujarat Urja Vikas Nigam ranged between Rs 2.30/kWh and Rs 2.66/kWh, alongside a decrease in solar module prices during the first quarter of the financial year 2024-25.

The Commission has chosen to maintain operation and maintenance (O&M) expenses at Rs 300,000/MW for the first operational year, with an annual escalation of 3.84% for tariff determination purposes.

The normative Capacity Utilization Factor has been set at 19% for the 25-year project life. A debt-equity ratio of 70:30 will be used for tariff determination. The normative interest rate for term loans is set at 10.15%, with a 15-year loan repayment period.

Depreciation rates are established at 4.67% per annum for the first 15 years and 2% from the 16th to the 25th year.

The working capital requirements for solar projects will include O&M expenses for one month, receivables for one month of electricity sales, and maintenance spares at 1% of the capital cost, escalating to 5% per annum. The normative interest on working capital is set at 10.65%.

In accordance with the GERC Multi-year Tariff Regulations 2024, the Commission has set the return on equity at 15.5% for projects below the eligibility threshold. Additionally, the Minimum Alternate Tax has been set at 17.47% per annum for the first ten years, with a Corporate Tax rate of 34.94% for the subsequent 15 years.

The Commission has considered a discount rate of 9.77% for levelised tariff calculations, reflecting the interest rate on term loans and return on equity. Should project developers receive financial assistance, incentives, subsidies, or other benefits from the Central or State Government, the tariff will be determined accordingly by the Commission.