Uttar Pradesh to Issue RfS to Procure Bagasse-Based Power at Ceiling Tariff of ₹4.81/kWh

UPPCL proposes to charge ₹0.18 (~$0.0025)/kWh for utilizing existing transmission infrastructure


The Uttar Pradesh Electricity Regulatory Commission (UPERC) has approved amendments to the bidding documents for the procurement of bagasse-based power from generators by the Uttar Pradesh Power Corporation Ltd. (UPPCL).

UPPCL had proposed the amendments in expectation that this would lead to discovery of competitive tariffs for these bagasse-based power projects.

Amendments proposed by UPPCL to UPERC:

  • To reduce the procurement capacity from 50 MW to 25 MW (+/- 20 percent).
  • To reduce the tenure of power purchase agreement (PPA) from 20 years to 10 years.
  • A ceiling of 45 percent on non-escalable fixed charges.
  • An upper tariff ceiling of ₹4.81 (~$0.068)/kWh was proposed by UPPCL.
  • To allow a provision for availability-based tariff (ABT) and deviation settlement mechanism.
  • To charge ₹0.18 (~$0.0025)/kWh for utilizing existing transmission infrastructure.
  • To revise the discounting rate from 9.15 percent to 9.08 percent.

While examining the petition and submissions made by UPPCL, UPERC observed that previously upon UPPCL’s request the minimum project capacity at a single site had been reduced to 2 MW. This was expected to result in participation from smaller sugar mills who could offer competitive rates.

The UPERC approved all the proposed amendments and ordered the UPPCL to complete the bidding process within 10 days of this order.

Previously, UPERC had disapproved three standardized power purchase agreements (SPPAs) for the procurement of 32.5 MW of bagasse-based power from generators by UPPCL. UPERC had found that when the UPPCL had initiated the process of competitive bidding for the procurement of power, it will be unfair to enter bilateral agreements with mutual consent as it will undermine the sanctity of the bidding process, lead to unfair pricing, and give the generator advantage.

In December 2018, the Ministry of New and Renewable Energy (MNRE) amended two clauses in the policy to support the promotion of biomass-based cogeneration projects in sugar mills and other industries in the country up to March 2020. MNRE had announced the program in May 2018.

In October 2018, the Telangana State Electricity Regulatory Commission (TSERC) issued an order determining the generic tariff for bagasse-based power plants in Telangana for the control period 2018-2020 at levelized fixed cost of ₹2.23 (~ $0.03) per unit. In the same month, the Maharashtra Electricity Regulatory Commission (MERC) approved Maharashtra State Electricity Distribution Company Limited’s (MSEDCL) proposal to initiate a competitive bidding process followed by reverse e-auction to procure 200 MW grid-connected bagasse-based cogeneration power with the upper tariff ceiling of ₹4.00 (~$0.054)/kWh.

Image Credit: Nava Bharat Ventures Limited