CERC Proposes Generic Tariffs for Renewable Energy Sources for FY 2019-20
Project specific tariffs evaluated after taking into account the useful life of each project
The Central Electricity Regulatory Commission (CERC) has proposed a set of levelized generic tariffs for the purchase of electricity from a host of renewable energy generation sources during financial year (FY) 2019-20.
The levelized generic tariffs will apply to small hydro projects, biomass with Rankine cycle projects, non-fossil fuel-based co-generation projects, biomass gasifiers, and biogas-based projects. The commission has decided to go with project specific tariff as against generic tariff for solar photovoltaic, solar thermal, wind (onshore and offshore), municipal solid waste/refuse-derived fuel and other emerging renewable energy technologies.
While arriving at the levelized generic tariff structure, the CERC took into account the expected useful life of each project. In its order, the CERC considered the useful life of small hydro projects to be 35 years, whereas the useful life for biomass with Rankine cycle, non-fossil fuel-based co-generation, biomass gasifiers, and biogas-based projects was set at 20 years.
For renewable energy technologies having fuel cost component, such as biomass power projects and non-fossil fuel-based cogeneration, single part tariff with two components; fixed cost component and fuel cost component, is proposed to be determined.
The CERC has considered a debt, equity ratio of 70:30. Interest rate considered for the debt component of capital cost is 10.41 percent. For equity component, rate of return on equity is considered at post tax rate of 14 percent.
For small hydro projects of capacity up to 5 MW in Himachal Pradesh, Uttarakhand, West Bengal and north eastern states, the proposed capital cost is ₹100 million (~$1.42 million)/MW. In other states, the capital cost is ₹77.9 million (~$1.11 million)/MW for a 5 MW small hydro project.
For small hydro projects of capacity 5 MW to 25 MW in Himachal Pradesh, Uttarakhand, West Bengal and north eastern states, the proposed capital cost is ₹90 million (~$1.28 million)/MW. In other states, the capital cost is ₹70.7 million (~$1 million)/MW for small hydro project of capacity 5 MW to 25 MW.
The commission has proposed retaining previous year’s normative capital cost for biomass-based projects. The rate of depreciation for the first 13 years is proposed to be 5.28 percent and the rate of depreciation from the 14th year onwards is proposed to be spread over the balance useful life of the renewable energy projects.
The proposal is up for comments up to February 10, 2019. A public hearing will be held for the same on February 15, 2019.
This is the third year that CERC is issuing generic tariffs for select renewable energy sources. In March 2018, it had issued generic tariff for select renewables for FY 2018-19. Mercom previously reported on the fixed generic tariff proposed by CERC for select renewables for FY 2017-18.
Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.