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A competitive bidding mechanism has been devised for PV projects, due to an overwhelming response to the NSM scheme. A second reason given for the lower PV tariff is a demand to that effect by the States, for which they cited efficiency improvements as a reason.  Thus, competition has been hardwired into the NSM, to ensure that developers use the most efficient technology.

Solar project developers offering the best discount on a tariff to be notified by the electricity regulator will figure higher in the pecking order during the allocation of identified projects under the Solar Mission programme.  NVVN (NTPC Vidyut Vyapar Nigam), the trading arm of NTPC, will procure power from the solar producers offering the most competitive tariffs on the ceiling rates to be notified by the Central Electricity Regulatory Commission (CERC) next week, according to official sources.

However, solar thermal tariff has been increased for 2010-11, which is based on industry representations seeking a higher rate and availability of more data on capital cost of the projects. Besides, the solar thermal power projects are being given a special dispensation that the tariff will be applicable for two years beyond 2010-11, sources added.

Thus, the tariff rates under consideration by the CERC for 2010-11 are Rs 17.90 a unit for photovoltaic (PV) and Rs 15.40/unit for solar-thermal. The tariffs are notified annually by the CERC. For 2009-10, electricity generation cost for PV was Rs 18.44/unit, and in the case of solar thermal, it was Rs 13.45. Click here for more on this news.