Compendium of Regulations & Tariff Orders Issued by Regulatory Commissions for Renewable Energy Sources in India

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1 391 RAJASTHAN ELECTRICITY REGULATORY COMMISSION (Terms and Conditions for Determination of Tariff for Renewable Energy Sources Biomass, Biogas and Biomass Gasifier Energy) Regulations Notification dated 7 th May, 2015 Sl. Description No 1. Short Title, Extent and Commencement Summary RERC (Terms and Conditions for Determination of Tariff for Renewable Energy Sources Biomass, Biogas and Biomass Gasifier Energy) Regulations dated 7 th May, 2015 Regulations shall extend to the whole of the State of Rajasthan. Applicable for determination of tariff in cases covered under these Regulations from FY to FY Provided that for all purposes including review matters pertaining to the period till FY , issues related to determination of tariff to be governed by the RERC (Terms and Conditions for Determination of Tariff) Regulations, 2004 or RERC (Terms and Conditions for Determination of Tariff) Regulations, 2009, including amendments thereto Regulations to come into force on and unless reviewed earlier/extended by the Commission, to remain in force for a period of four years from COD 2. Definitions As per Regulations Usefull life for Biomass, Biomass Gasifer and Biogas 20 yr 3. Scope of Regulations and Extent of Application To apply where generic tariff for generating plant is determined by the Commission subject to the fulfillment of eligibility criteria Notwithstanding anything contained in these Regulations, the Commission to adopt the tariff determined through a transparent bidding process in accordance with the guidelines issued by the Central Government 4. Eligibility Criteria (i) Biomass power plant based on Rankine Cycle using new plant and machinery having grid connected system that uses Rankine Cycle technology and Biomass fuel sources, provided use of Fossil fuel is restricted up to 15% in terms of calorific value on annual basis, till (ii) Biogas based power plants- To qualify if it is using new plant and machinery and having grid connected system, and uses 100% Biogas fired engine or producer gas turbines, coupled with Biogas technology for codigesting agriculture residues, manure and other Bio waste as approved by MNRE. (iii) Biomass Gasifier based power plant-to qualify if it is using new plant and machinery having a grid connected system, that uses 100% producer gas engine or turbine, coupled with Gasifier technologies approved by MNRE 5. Control Period Four financial years, with first year being Plants commissioned during the Control Period, to be applicable for the entire duration of the Tariff Period 6. Tariff Period 20 years 7. Petition and Proceedings for determination of Tariff Commission may determine the generic tariff on suo-motu basis at the beginning of each year of the Control Period in accordance with the RERC (Transaction of Business) Regulations, 2005 as amended from time to time

2 392 Compendium of Regulations & Tariff Orders Issued by Regulatory Commissions for Renewable Energy Sources in India 8. Tariff Structure To be a two-part tariff consisting of fixed cost component and fuel cost component. The fixed cost component shall have the following components: (a) Operation and (O&M) Expenses; (b) Depreciation; (c) Interest on Loan Capital; (d) Interest on Working Capital; and Return on Equity 9. Tariff Design Generic tariff to be determined on levellised basis and fuel cost component to be specified on yearly basis. However, for computation of interest on the working capital requirement of the fixed cost component, an escalation of 5% p.a. in fuel/feed stock price to be considered. For levellised tariff computation, discount factor equivalent to post tax weighted average cost of capital to be considered. Levellisation to be carried out for the Tariff Period. 10. Despatch Principles To be treated as Must Run power plants, not subjected to Merit Order Despatch principles 11. Capital Cost As specified in the Technology Specific Parameters 12. Debt Equity 70:30 Ratio 13. i) Loan Tenure 12 years ii)interest Rate Average State Bank of India (SBI) Base Rate prevalent during the first six months of the year previous to the relevant year plus three hundred (300) basis points. Notwithstanding any moratorium period availed by the generating company/project, the repayment of loan to be considered from the first year of commercial operation of the project and shall be equal to the annual depreciation allowed. 14. Depreciation Computed on Straight Line Method. For the first 12 years of the Tariff Period % of the Capital Cost per annum Remaining depreciation to be spread over the remaining useful life of the 15. Return on Equity(ROE) 16. Interest on Working Capital 17. Operation & (O&M) Eexpenses project from the 13 th year onwards. Depreciation to be chargeable from the first year of commercial operation. If the commercial operation of the asset is for part of the year, depreciation to be charged on pro-rata basis.. Base for equity to be 30% of the Capital Cost ROE to be computed at the base rate of 16% by grossing up the base rate with tax rate equivalent to Minimum Alternate Tax for first 10 years from COD and normal tax rate for remaining years of project life. The Working Capital to be computed in accordance with: Fuel cost for four months at normative PLF O&M Expenses for one month; Receivables equivalent to 1.5 months of fixed and variable charges for sale of electricity calculated at the normative PLF; Spares at 20% of O&M Expenses. Interest on Working Capital to be taken as average SBI base rate prevalent during first six months of previous year Plus 250 basis points Normative O&M expenses shall be determined for the Tariff Period based on the normative O&M expenses specified by the Commission for the first year of the Control Period i.e. FY to be 5.85% p.a over the Tariff Period.

3 Rebate For payment of bills through LC or by cash/cheque within three working days of presentation of bills, a rebate of 2% to be a llowed. For payments beyond 3 working days but within 30 days a rebate of 1% to be allowed 19. Late Payment Surcharge 20. Sharing of CDM Benefits 21. Subsidy or Incentive by Central/State Government In case the payment of any bill is delayed beyond a period of 45 days from the date of presentation of bills, a late payment surcharge of 1.25% per month calculated on a daily basis to be levied by the generating company. CDM Benefits during the Control Period to be shared in the ratio of 25:75 between the Distribution Licensee and Generating company respectively and the share of 25% obtained by the Distribution Licensee to be passed on to the consumers. In case the Distribution Licensee itself is the generating company, then 75% to be retained by the Distribution Licensee and balance 25% passed on to the consumers Commission to take into consideration any incentive/ subsidy/benefit available from Central/State Government, including accelerated/higher depreciation benefit, if availed by the generating company while determining tariff For Principles considered for ascertaining income tax benefit on account of accelerated/higher depreciation, if availed, for tariff determination may refer Regulations Technology Specific Parameters for Biomass Power Plants based on Rankine Cycle Technology 22. Capital Cost Normative Capital Cost to include all capital works including plant and machinery, civil works, erection and c ommissioning, financing and interest during construction etc., and evacuation infrastructure up to the interconnection point Normative Capital Cost for FY Rs. 540 Lakh/MW with water cooled condenser and Rs. 575 Lakh/MW with air cooled condenser. Capital cost is inclusive of Rs. 15 Lakh/MW towards cost of transmission system up to the interconnection point including Rs. 2 Lakh/MW for grid connectivity charges payable to Transmission /Distribution Licensee Capital Cost Indexation Mechanism as outlined at Annexure-II of the Regulations shall be applicable for determining tariffs for the plants commissioned for each subsequent year during the Control Period. 23. Plant Load Factor a) During stabilization- 60% b) During first year after stabilization - 70% c) From second year onwards - 75% Stabilisation period to be not more than six months from the date of the commissioning of the plant. 24. Auxiliary Factor Water Cooled Condenser Air Cooled Condenser 10.50% 12.50% (during Stabilisation) (during stabilization) 10% (after stabilization) 12% (after stabilsation)

4 394 Compendium of Regulations & Tariff Orders Issued by Regulatory Commissions for Renewable Energy Sources in India 25. Station Heat Rate Water Cooled Condenser 4300 kcal/kwh (during stabilization) 4200 kcal/kwh (after stabilization) Air Cooled Condenser 4540 kcal/kwh (during stabilization) 4440 kcal/kwh (after stabilization) 26. Calorific Value 3400 kcal/kg 27. Operation and (O&M) Expenses Normative O&M expenses for first year of the Control Period - Rs.35.64Lakh/MW for Water Cooled Condenser and Rs 38 Lakh/MW for Air Cooled Condenser to be 5.85% p.a over the Tariff Period to compute the levellised tariff. 28. Fuel Price Rs. 2550/MT for FY For more Details refer Regulations Use of Fossil fuels to be limited to 15% in terms of calorific value on annual basis, till Monitoring As Detailed in the Regulations Mechanism for use of Fossil Fuel 30. Variable Charges [Station Heat Rate (SHR)/Gross Calorific Value (GCV)] x [1/(1 Aux Consum. Factor)] x (P/ 1000) P = Fuel price in Rs. per Metric Tonne applicable for the relevant year Technology Specific Parameters for Biogas Power Plants 31. Capital Cost Normative Capital Cost to include all capital works including plant and machinery, civil works, erection and commissioning, financing and interest during construction etc., and evacuation infrastructure up to the interconnection point Normative Capital Cost for FY Rs Lakh/ MW and net project cost - Rs Lakh/MW Capital cost is inclusive of evacuation of generated energy up to the interconnection point and also includes Rs. 2 Lakh /MW for grid connectivity charges payable to Transmission /Distribution Licensee Capital Cost Indexation Mechanism as outlined at Annexure -II of the Regulations to be applicable for determining tariffs for the plants commissioned for each subsequent year during the Control Period. 32. Plant Load Factor 85% 33. Auxiliary 12% Factor 34. Specific Fuel 3 Kg of substrate mix per kwh 35. Operation and (O&M) Expenses 36. Fuel cost (Feed stock price) Normative O&M expenses for the first year of the Control Period - Rs Lakh/MW to be 5.85% p.a over the Tariff Period to compute the levellised tariff. Feed stock price for FY Rs 1269/MT to be linked for subsequent years to the Fuel Price Indexation Mechanism outlined at Annexure-III of these Regulations. 37. Variable Charges [Specific fuel consumption (Kg/Unit)] x [1/(1 Aux Consum. Factor)] x (P/1000), P = Fuel cost in Rs per Metric Tonne. Technology Specific Parameters for Biomass Gasifier based Power Plants 38. Capital Cost Normative Capital Cost to include all capital works including plant & machinery, civil works, erection and commissioning, financing and interest during construction etc., and evacuation infrastructure up to the inter-connection point

5 395 Normative Capital Cost for FY Rs Lakh/MW and Net Project Cost- Rs Lakh/MW Capital cost is inclusive of evacuation of generated energy up to the interconnection point and also includes Rs. 2 Lakh /MW for grid connectivity charges payable to Transmission /Distribution Licensee Capital Cost Indexation Mechanism as outlined at Annexure -II of the Regulations to be applicable for determining tariffs for the plants commissioned for each subsequent year during the Control Period. 39. Plant Load Factor 85% 40. Auxiliary Power 12% Factor 41 Specific Fuel Normative specific fuel consumption Kg per kwh 42. Operation and (O&M) Expenses 43. Fuel cost (Feed stock price) Normative O&M expenses for the first year of the Control Period - Rs Lakh/MW to be 5.85% p.a over the Tariff Period to compute the levellised tariff. Feed stock price for the first year of the control period shall be as per regulation 28 of these Regulations 44. Variable Charges [Specific fuel consumption (kg/unit)] x [1/(1 Aux.. Factor)] x (P/1000). P = Fuel cost in Rs per Metric Tonne 45. Tariff for existing Plants set up as per Government of Rajasthan and Government of India Policies Tariff for electricity supply to the Distribution Licensee by Biomass power plants, for which PPA have been executed under GoR Policy of 1999 and commissioned before shall be as under: Sr. No. Renewable Energy Generation during the year Tariff in Rs. Per kwh for plants under GoR policy

6 396 Compendium of Regulations & Tariff Orders Issued by Regulatory Commissions for Renewable Energy Sources in India 46. Tariff for Plants under the REC Mechanism In case a Biomass, Biogas or Biomass Gasifier generator desires to switch over from REC to preferential tariff mechanism under REC (Renewable Energy Certificate and RPO Compliance Framework) Regulations, 2010, and if Discom agrees to purchase, the levellised tariff determined in accordance with these Regulations for sale to Distribution Licensee in respect of the year in which the plant was commissioned, shall be applicable. in case of purchase by the Discom in the same year, in which plants have been commissioned, has been at a rate lower than the levellised tariff determined for that year, the lowest rate would be applicable. The same principle would be applicable to the plants commissioned during the previous MYT Control Period ending on Grid Connectivity Grid connectivity charges of Rs. 2 Lakh/MW to be payable by Generators to Transmission/Distribution Licensee Power injection into the State Grid to be limited to the capacity detailed in the Regulations for various conductors 48. Metering As detailed in the Regulations 49. kvarh Charges Net kvarh drawal by generating plants from the Grid to be billed at paise/ kvarh w.e.f escalated annually at 0.50 paise / kvarh, unless otherwise revised by the Commission 50. Import of Power by Generating Stations 51. Transmission & Wheeling Charges 52. SLDC Fees and Charges 53. Cross-subsidy Surcharge 54. Banking & Energy Accounting Energy drawn from the grid during shutdown/outages, and for restarting, to be set off against the energy sold to the Distribution Licensee within the State on quarterly basis. For third party sale/captive use within/outside the State, Transmission & Wheeling charges to be recovered in cash and Transmission losses and Wheeling losses recovered in kind For use of transmission network, Transmission charges and losses as determined by the Commission in respect of open access transactions to be applicable. For use of D istribution licensee s network, Wheeling charges and losses as determined by the Commission in respect of open access transactions to be applicable. For use of both EHV and distribution network, Transmission & Wheeling charges and losses to be payable In case of PPA executed and plants commissioned up to under the State Government Policies, charges as per Policy to be applicable unless RE power plant opts otherwise. As specified in RERC (Levy of fee and charges by the State Load Despatch Centre) Regulations, 2004 as amended from time to time. Not applicable in case of open access transactions Banking allowed for only captive consumption within the State on monthly basis Banked energy in a month not to exceed quantum of energy injected in the grid in the month. In case the energy injected is lower than indicated banked energy, the banked energy would be deemed to get restricted up to the energy injected. RE Power Generator/Developer entitled to get of energy charges applicable for large industrial power tariff, excluding fuel surcharge, if any, in respect of 10% of unutilized banked energy after the end of month of Banking. Unutilized banked energy, in excess of 10% shall lapse.

7 Deviation from Provisions of Regulations Generator to raise monthly bill and Licensee to make payment within 30 days from date of receipt of bill beyond which, Late Payment 1.25% per month, calculated on a daily basis to become applicable. Banking of 2% of banked energy in each month to be payable in kind. Powers vested with the Commission 56. Power to Amend Powers vested with the Commission 57. Power to Remove Powers vested with the Commission Difficulties