Tariffs for renewable energy projects including wind and solar projects will see a decrease as the government has decided in principle to encourage competitive bidding for it. Previously the government had adopted the cost plus basis for ascertaining the tariff for renewable energy projects which was then revised to upfront tariff.
According to a source in the government, the reason for this policy change has been due to increasing competition globally and a global shift has been made to competitive bidding from the previous cost plus basis and upfront tariff regime. As per the source “Sponsors of new solar and wind power projects, who will approach the National Electric Power Regulatory Authority (NEPRA) for the announcement of reference tariff, will be asked to participate in a bidding process for the award of tariff.”
Nepra has determined a base tariff of 6.7 US cents per units for renewable energy projects which include wind and solar. Also the source mentioned that “In view of the consistent interest of domestic and foreign investors in renewable energy projects and declining prices of such technologies, the competitive bidding for wind and solar power projects will push the tariff down further.”