Gujarat May Reduce Annual Escalation Rate to 3% on Biomass and Bagasse-Based Projects

The last date for the submission of comments is March 27, 2020

March 20, 2020


The Gujarat Electricity Regulatory Commission (GERC) has issued a draft order to initiate the regulatory process for determining the tariff for procuring power from biomass and bagasse-based co-generation projects in the state.

The GERC has invited suggestions and objections from the public and stakeholders. The last date for the submission of comments is March 27, 2020, and the hearing date has been scheduled for March 30, 2020.

In March 2018, the Commission had issued generic tariff order to procure power by distribution licensees from biomass and bagasse-based co-generation projects in Gujarat. The control period of the order is until March 31, 2020.

In the tariff order issued in March 2018, the Commission had allowed an escalation of 5% in variable charges for the FY 2018-19 and 2019-20.  Considering the present market situation, the Commission has proposed to allow an escalation in variable charges of 3% yearly for the FY 2020-21 to FY 2022-23.

According to the order proposed by the Commission, it states that energy charge and variable cost under the biomass-based power projects with water-cooled condensers, is ₹4.13 (~$0.055)/ kWh for FY 2020-21 followed by ₹4.25 (~$0.057)/kWh in FY 2021-22, and ₹4.38 (~$0.059)/kWh in 2022-23.

Under the biomass-based power projects with air-cooled condensers, the variable cost is ₹4.30 (~$0.058)/kWh in FY 2020-21, followed by an increase of ₹0.13 (~$0.002)/kWh each for the financial years 2021-22 and 2022-23.

Gujarat - Tariff for Procurement of Power from Biomass and Bagasse-based Co-generation Projects

For bagasse-based co-generation projects, the energy charge or variable cost for FY 2020-21 is ₹4.12 (~$0.055)/kWh, followed by a ₹0.12 (~$0.001)/kWh increase in FY 2021-22. In FY 2022-23, the proposed cost is increased by ₹0.13 (~$0.002)/ kWh.

Recently, the Andhra Pradesh Electricity Regulatory Commission (APERC) has also determined the fuel price for biomass and industrial waste-based projects at ₹3,176.72 (~$45)/metric ton for the financial year 2019-20. The fuel cost for bagasse-based projects has been set at ₹1,788.43 (~$25)/MT for FY 2019-20. These rates will be increased at 5% every year up to FY 2023-24 as per the Central Electricity Regulatory Commission Regulation, 2017. By adopting the fuel price at ₹1,788.43 (~$25)/MT for bagasse for FY 2019-20, the unit price of power will be ₹3.14 (~$0.04)/kWh.

In January 2020, Mercom reported that the Uttar Pradesh Electricity Regulatory Commission approved the amended power purchase agreement for bagasse-based power signed between DSCL Sugar, Hariawan, and the Uttar Pradesh Power Corporation Limited (UPPCL). The Commission approved the tariff of ₹4.78 (~$0.067)/kWh in line with the amended PPA.

Previously, it was reported that the Maharashtra State Electricity Distribution Company Limited (MSEDCL) had issued a tender for the procurement of 100 MW of power generated from bagasse-based co-generation projects.  The ceiling tariff mentioned in the tender was ₹3.56 (~$0.05)/kWh, and 50% of the tariff will be treated as the variable cost.


Image credit: A.P.T. Engineering & Construction