Kerala Raises Electricity Tariff – A boost to the Rooftop PV segment

The Kerala State Electricity Regulatory Commission (KERC) has raised the electricity tariff across the state with effect from the first of May 2013. (The state cabinet will deliberate on the hike and find ways to reduce the impact). The revised tariff affects consumers who have a high electricity consumption per month as opposed to about 25 lakh consumers who use less than 40 units of electricity per month who remain unaffected. The power tariff in the state was previously revised in July last year when the the tariff was hiked by about 30%.

The revised tariff structure is highlighted below

• Up to 40 units – Rs. 1.5 per unit
• 41 to 80 units – Rs. 2.2 per unit
• 81 to 120 units – Rs. 3 per unit
• 121 to 150 units – Rs. 3.80 per unit
• 151 to 200 units – Rs. 5.30 per unit
• 201 to 300 units – Rs. 6.50 per unit
• Up to 350 units – uniform rate of Rs. 5 per unit (no slabs, flat tariff)
• Up to 400 units – uniform rate of Rs. 5.5 per unit (flat tariff)
• Up to 500 units – uniform rate of Rs. 6 per unit (flat tariff)
• Above 500 units – uniform rate of Rs. 7 per unit (flat tariff)

The tariff hikes stand at about 12% for domestic consumers while for industrial users the hike works out to be about 7%. The raise in tariff comes at a time when the state is reeling under severe power deficit. With about 70% of the state’s capacity tied to hydel power sources and the fact most of the reservoirs are running dry, the state has opted to go for load shedding and power procurement from the open market to ensure the grid holds. The initial load shedding duration was one hour per day which has now increased to two hours per day owing to the growing deficit.

The good news here is that the hike in tariff would make the 10,000 solar rooftop programme being adopted in Kerala a bigger success as the increasing conventional power tariff makes solar more competitive which translates to the government having to take fewer measures to convince the masses. It can be safely said that rooftop solar has almost reached grid parity now especially considering the capital subsidies offered both by the state government as well as MNRE which further drives down the cost involved. With growing demand and more interest from the supplier side, the prices could fall down even further making (rooftop) solar THE go to solution especially in a state with limited land area available for development.

In addition to this, the increasing hours of load shedding across the state could also prove to be another reason why consumers would be forced to make the switch to solar power. The various solar initiatives (including the Kerala State Solar Policy) being adopted by the state aims to supply at least 25% of the total energy consumption through solar as there is very little development going on in terms of bolstering power production capacity across the state considering the limited resources available.

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