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Overview

This report attempts to estimate the rise in tariffs for electricity consumers in Delhi over a period of ten years, and explore the effects of increasing renewable energy penetration on the tariffs.

Estimating the future cost of electricity requires an understanding of the different components that make up an electricity bill, the regulatory procedures and influences that impact the tariff for each of these components, and the market and political forces that affect these tariffs.

The estimates incorporate two scenarios of renewable energy growth (high renewable energy penetration and low renewable energy penetration) and their impact on cost of procurement.

Key Findings

• There are four component that influence an electricity bill - power procurement costs, transmission charges, distribution charges and cross-subsidy charges, which this report examines in detail.
• Power procurement costs continue to constitute the largest share of the cost of supply.
• Transmission charges will rise as per the investments made in the overall network.

Share of cost of supply components

• Electricity costs for commercial customers will rise at an expected CAGR of 4 per cent. For industrial customers, costs will rise at an expected CAGR of 5 per cent.
• Solar energy will make significant inroads in future energy mix of Delhi, despite the limitations posed by the lack of land.
• Consumers in Delhi will benefit from the decreasing trend in tariffs associated with renewable energy generation.
• The decrease will be accentuated by the economies of scale and the expectations of technological breakthroughs that will drive down costs.