CASE Nos. 8/9/10/15/17/18/19/20/21 of In the matter of Purchase of power from Bagasse based Co-generation Projects, etc.

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1 Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION 13 th floor, Centre No.1, World Trade Centre, Cuffe Parade, Mumbai Tel / , Fax No mercindia@mercindia.com Website: CASE Nos. 8/9/10/15/17/18/19/20/21 of 2001 In the matter of Purchase of power from Bagasse based Co-generation Projects, etc. Shri P. Subrahmanyam, Chairman Shri Jayant Deo, Member Dr Pramod Deo, Member CLARIFICATORY ORDER Dated: November 21, 2003 Under its Order dated 16 th August 2002 in Case Nos.8/9/10/15/17/18/19/20/21 of 2001, the Commission has determined the power purchase and procurement process, including the price for procurement of power by the Maharashtra State Electricity Board (MSEB) and other utilities/ licensees from co-generation stations using bagasse and other non-fossil fuels, and given guidelines to aid the State Government in formulation of State Policy. 2. The Order dated 16 th August 2002 specifies the qualification criteria as follows: A Co-generation facility is defined as one, which simultaneously produces two or more forms of useful energy such as electrical power and steam, electric power and shaft (mechanical) power, etc. The project may qualify to be termed as a co-generation project, if it is in accordance with the definition and also meets the qualifying requirement outlined below: Topping cycle mode of co-generation Any facility that uses non-fossil fuel input for the power generation and also utilizes the thermal energy generated for useful heat applications in other industrial activities simultaneously. For the co-generation facility to qualify under topping cycle mode, the sum of useful power output and one half the useful thermal output be greater than 45% of the facility s energy consumption, during season. F:\adn\COMMISSION ORDER\Clarificatory Order [bagasse co-gen].doc Page 1 of 1

2 3. In its Interim Order dated 10 th September, 2003 passed in connection with the Review Petition filed by Shri S.R. Paranjpe as Case No.24 of 2002, the Commission had noted ambiguity, deficiencies and/or lack of uniformity on the part of MSEB and/or the developers in interpreting and computing the qualifying criteria stipulated in the principal Order dated 16 th August, Hence, pending a clarification of the relevant definitions, computation method, etc., the Commission had directed MSEB not to take any further action with regard to EPAs subsequent to the Order dated 16 th August, 2002, except for the specific projects mentioned in that Order. 4. In the above context, the Commission clarifies as follows with regard to some of the relevant terms and computation methods, as also the metering methodology, referred to in the Order dated 16 th August, 2002: (I) Definition of Terms: (a) Useful power output is the gross electrical output from the generator. There will be an auxiliary consumption in the cogeneration plant itself (e.g. the boiler feed pump and the FD/ID fans). In order to compute the net power output it would be necessary to subtract the auxiliary consumption from the gross output. For simplicity of calculation, the useful power output is defined as the gross electricity (kwh) output from the generator. (b) Useful Thermal Output is the useful heat (steam) that is provided to the process by the cogeneration facility. (c) Energy Consumption of the facility is the useful energy input that is supplied by the fuel (normally bagasse or other such biomass fuel). Note: The above definitions are applicable to the facility for the operation during the season. F:\adn\COMMISSION ORDER\Clarificatory Order [bagasse co-gen].doc Page 2 of 2

3 (II) Method of Computation: The Co-Generation facility can be represented in the following block diagram: m b Fuel (Bagasse or other Bio Mass, etc.) Condition 1: COGEN FACILITY m 1 m STEAM TO PROCESS E Electrical Output Weighted efficiency defined by the Commission in Order dated 16 th August, 2002: m 1, m 2, m b are the mass flow rates of steam at the levels 1, 2 and the non fossil fuel (bagasse etc.) flow respectively (these can be computed for a specified time interval as indicated in the implementation methodology). E+1/2(m 1 h 1 + m 2 h 2 ) η M = (1) GCV m b Where 1,2 are the state points at which steam is required in the process (the temperatures and pressures at points 1, 2 are to be measured and the enthalpies h 1, h 2 computed from the property data for water steam). E is the gross electrical output. GCV is the gross calorific value of the bagasse. As per the Commission s stipulation, therefore, the condition that must be satisfied is: η M > 0.45 during the season. Condition 2: As per the Ministry of Power (MoP) guideline for typical topping cycle (without supplementary firing), the following condition must be fulfilled by the facility during seasonal operation. Useful Thermal Output = 20% (minimum) Total Energy Output Thus, the co- generation facility under evaluation must satisfy the above two conditions to qualify under the Order. F:\adn\COMMISSION ORDER\Clarificatory Order [bagasse co-gen].doc Page 3 of 3

4 (III) Measurement and Verification Protocol for Compliance Monitoring: (a) An Energy Audit of the cogeneration facility should be conducted during every crushing season (once a year). The dates of the audit should be intimated to the purchasing utility / licensee, who have the option to depute their representatives to participate in the Audit. The utility / licensee shall ensure scrutiny of such Audit reports to ensure compliance with the Order. (b) The Audit should be carried out during a period of steady load on the facility during the season. (c) In addition to any other, the following readings/stipulations are mandatory for such Audit: (i) Duration of Test The duration should be at least one hour of continuous operation. (ii) Input fuel (e.g. Bagasse) Flow The total quantity of fuel supplied to a boiler for the duration of the test is to be measured (In case the continuous measurement of fuel inflow is not possible, an average figure of fuel intake/hour can be taken as the basis. To arrive at this average, the fuel weighment over a period of constant plant load operation either on 8-hour shift or 24 hours, as the case may be should be considered). (m b is to be then calculated in kg/hr). (iii) A sample of input fuel (e.g. bagasse) is to be tested (certified laboratory test report to be included) for its Gross Calorific Value using a bomb calorimeter. (iv) Temperatures and pressures are to be measured at the different steam consumption points 1,2, (T 1, P 1 and T 2, P 2 ) (v) The steam flow rates at 1,2 (m 1, m 2 ) are to be measured with on line steam flow meters. The flow meters are to be calibrated before the Audit. (vi) Electrical output at generator terminals is to be recorded in kwh for the test period. A schematic of the configuration showing the instrument locations should be provided. F:\adn\COMMISSION ORDER\Clarificatory Order [bagasse co-gen].doc Page 4 of 4

5 (d) The Audit should include computation of the boiler efficiency (based on direct or indirect method), the turbine isentropic efficiency and the auxiliary electricity consumption of the cogeneration facility. (e) In all future cases of submission of proposals for entering into EPA, the manufacturer test certificates for boiler efficiency and the turbine characteristic curves (steam flow rate vs power output) should be supplied along with the DPR. (f) The co-gen project entity shall appoint, at its cost, an independent Auditor for the purpose of conducting Energy Audit as above, from among a panel of such Auditors prepared by the Maharashtra Energy Development Agency (MEDA), the designated nodal agency for energy conservation in the State of Maharashtra. MEDA should ensure that quality standards are maintained by the panel. (g) The Audit results shall be reported to the Commission (in addition to the reporting requirements already stipulated in the Order) by the concerned utility / licensee.. (IV) METERING In the context of the Commission s reference in the Order dated 16 th August, 2002 to banking, third-party sale, etc., real time ToD meters with online reading features should be installed at the entry and exit point of each transaction. The utility / licensee, if opted for by the co-gen project entity, shall provide check meter, at the cost of the project, to assess the energy generated and fed into the grid during such period when the main meter or its related accessories such as CT/PT fail or develop problems, so as to avoid disputes in future. 5. With this Clarificatory Order, the operation of the Interim Order dated 8 th September, 2003 passed in Case No.24 of 2002 stands terminated and stay vacated. Sd/- Sd/- Sd/- (Jayant Deo) (Dr Pramod Deo) (P. Subrahmanyam) Member Member Chairman, MERC Sd/- (A.M. Khan) Secretary, MERC F:\adn\COMMISSION ORDER\Clarificatory Order [bagasse co-gen].doc Page 5 of 5