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      (i)     Evacuation Cost;
      (ii)    Module Cost;
      (iii)   Forex Rates;
      (iv)    Specific elements not considered individually by TNERC:

              (a)   Land;
              (b)   Mounting Structures;
              (c)   Inverters;
              (d)   Pre-operative expenses;
              (e)   Other expenses.

7.4 The Appellants have submitted that TNERC arbitrarily determined the capital cost without evaluating the individual components and accordingly, the aggregate capital cost determined is erroneous, does Appeal Nos. 118 & 151 of 2016 not reflect the actual cost of a project and in fact ensures under recovery of costs in perpetuity. In determining such capital cost arbitrarily, the TNERC ignored contemporaneous determination of solar tariffs by CERC which it was legally obliged to be guided by as well as ignored the determination process of other SERCs for the sake of comparison. The Impugned Order suffers from legal infirmities as it does not provide any reasoning and in fact is contrary to the TNERC's own regulations, i.e. the TNERC RE Tariff Regulations, read with the relevant provisions of the Act, CERC Regulations and Tariff Policy of the Government of India.

7.9 The argument advanced by the TNERC in the Impugned Order is that each bidding by different state utilities for solar energy finds a Appeal Nos. 118 & 151 of 2016 new low in terms of cost of energy. This, in our view does not qualify as a reason to adopt a cost without reference to the specific components of the capital cost. The Impugned Order is a tariff determination under Sec 62 of the Act. Therefore, the TNERC was required to analyze and evaluate the individual components of the capital cost, which it has failed to do. The conclusion that it had decided to adopt a capital cost of Rs. 5.05 Crores per MW which includes all the components and degradation of modules, is devoid of merit, does not fulfill the legal mandate of providing adequate reasoning and in any case is divergent from its own regulations which mandate that TNERC will be guided by the principles and methodologies specified by CERC and the Tariff Policy of the Government of India. The expression "guided by" as used in Sec 61 of the Act as well as Regulation 4(2) of the TNERC RE Tariff Regulations, cannot be read down to mean that the TNERC can ignore them. While the TNERC is indeed entitled to depart from the principles and methodologies specified by CERC, however, the TNERC is required to provide reasons for not following the same. The Impugned order does not provide any explanation and/or analysis to justify such departure.

8.10 Appellants further submit that TNERC has selectively chosen to follow CERC's order and wherever convenient has departed from the CERC order, to artificially reduce the costs/returns/revenues of the Appellants.

8.11 Per contra, both the respondents have asserted that in fact the USD and INR exchange rate has improved to the benefit of INR. Our Findings:-

8.12 We have examined the issue. The real issue is not whether the exchange rate has improved or not, rather whether the TNERC has factored for the impact of exchange rate variation, while determining the benchmark capital cost. Clearly the TNERC has not undertaken any analysis relating to exchange rate variation i.e. either to determine this variation or to analyse the impact of such exchange rate variation on the benchmark capital cost. Therefore, the Impugned Order is Appeal Nos. 118 & 151 of 2016 vitiated on this count too. The capital cost should have specifically taken in to account the impact of exchange rate variation. 8.13 Considering above it is clear that TNERC has not gone into detail of individual elements of the Capital Cost and have blindly followed the draft order of CERC. In the absence of TNERC not going into individual elements of the Capital Cost, should have at least followed the CERC's final order on benchmark Capital Cost for discovering the fair module / capital cost and in turn, tariff.
13. Auxiliary Consumption

13.1 Appellants submitted that TNERC in the Impugned Order has not provided for any auxiliary consumption. TNERC has selectively followed the CERC tariff order wherever convenient and has reduced the costs/tariff. Evidently, the only explanation/reasoning given by TNERC is the decline in tariffs in successive bids. 13.2 TNERC has not taken into account the Auxiliary consumption for determination of tariff. In a Solar PV plant generation takes place during day time and plant meets its auxiliary consumption out of such energy generation and supplies the net electricity available after meeting its auxiliary consumption into the grid. During night time there is no energy generation at Solar PV plant and during this period the plant draws its auxiliary power consumption from the grid for running Appeal Nos. 118 & 151 of 2016 auxiliary viz. air-conditioning in inverter and control room, cleaning water softening and pumping system, security lighting and general office lights and fans. Therefore, many SERCs have provided Auxiliary Consumption at 0.25%. There was no justified reason provided by TNERC to depart from the same.