The Telangana State Electricity Regulatory Commission (TSERC) has issued the year-wise fixed-cost tariff for a 7.5 MW industrial waste-to-energy project in the Warangal district, Telangana.

The year-wise tariff determined in the order will apply to the delivered energy corresponding to the normative plant load factor (PLF) for the corresponding year approved in the order.

The Commission clarified that the tariff was exclusive of the income tax. The income tax paid by the petitioner would be reimbursed by the Northern Power Distribution Company of Telangana Limited (TSNPDCL) on payment of the taxes.

MSR Mega Bio-Power filed a petition to determine the fixed cost tariff for its 7.5 MW industrial waste-to-energy project in the Warangal district.

Background

MSR Mega Bio-Power had signed an agreement to develop a 7.5 MW of industrial waste-to-energy project with the Non-Conventional Energy Department Corporation of Andhra Pradesh on October 24, 2009. The state was later bifurcated, with Telangana becoming a separate state. The company entered into a power purchase agreement (PPA) on April 30, 2016, with TSNPDCL to sell 7.5 MW of power.

The company said that its project fell under the category of ‘Project (other than rice straw and julifora plantation-based project) with air-cooled condenser’ for which the capital cost determined by CERC for FY 2016-17 was ₹60.04 million (~$796,593)/MW. The generator said that it had no objection to the submissions of TSNPDCL to consider the capital cost of ₹55.9 million (~$741,664)/MW.

The petitioner said that the project had been commissioned in FY 2016-17 and therefore, the generic tariff order of the Central Electricity Regulatory Commission (CERC) for the financial year (FY) 2016-17 was to be considered rather than the generic tariff order dated June 22, 2013, which applied to projects commissioned during from FY 2004-05 to FY 2008- 09.

Commission’s analysis

The Commission observed that the project was to be commissioned within two years from the agreement date by October 23, 2011. Subsequently, an extension of time was granted until July 14, 2016. The project achieved commercial operation on June 1, 2016.

In its replies to the stakeholders, the petitioner had submitted that the capital cost might be considered as ₹55.9 million (~$741,664)/MW, which worked out to ₹419.3 million (~$5.56 million) for the project capacity of 7.5 MW.

The Commission approved the normative debt-equity ratio of 70:30. It also approved the equity amount as ₹79.4 million (~$1.05 million), less than 30% of the approved capital cost.

The petitioner’s claim for a useful life of 20 years was also approved.

The state regulator noted that the PLF of 80% claimed by the generator for tariff determination was higher than the capacity utilization factor (CUF) for the first and second years and lower than the CUF from the fourth year onwards as per the techno-economic viability study. It approved the normative PLF of 80% and the normative auxiliary consumption of 10%.

The Commission noted that the normative operations and maintenance (O&M) expenses must be commensurate with the normative PLF. Therefore, it approved the normative O&M expenses of ₹4.72 million (~$62,623)/MW for the first year of operation as claimed by the petitioner.

Considering all the parameters mentioned above, the Commission arrived at the fixed cost tariff for the 7.5 MW industrial waste-to-energy project. It noted that as the tariff will be payable by TSNPDCL, it did not find the need to determine the levelized tariff.

The tariff for the first year of operation claimed by the waste-to-energy project developer was ₹3.07 (~$0.041)/kWh, and the tariff approved by the Commission was ₹2.16 (~$0.029)/kWh

In July last year, TSERC proposed the variable costs for the state’s existing biomass, bagasse, and industrial waste-based power projects. The costs will be applicable for projects having PPAs with the distribution licensees and will be valid from FY 2020-21 to FY 2023-24.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.