Central Electricity Regulatory Commission (CERC) through its RE Tariff Regulations, Regulation 22 provides for income tax benefits on account of Accelerated Depreciation (AD) to solar power developers. The following principles are followed while determining the income tax benefits when AD is availed.
1) Normative capital cost is considered and AD as per Section 80IA of the Income Tax act
2) Capitalization of RE projects during second half of the financial year
3) Per unit levelized benefit is derived at a discount factor equal to post-tax weighed average cost of capital
The developer can avail AD upto 80% of the capital cost and additional depreciation of 20% of the capital cost.
CERC has determined the levelized tariff for solar PV during FY13-14 @Rs.8.75/kWh. Benefit of AD is calculated @Rs.0.88/kWh bringing the net levelized tariff @Rs.7.87/kWh.
Asim Sharma, Consultant, FGC