Staff Paper Determination/Fixation of generic levellised generation tariff for various Renewable Energy Technologies / Projects for the year 2015-16 1. The Punjab State Electricity Regulatory Commission (Commission) in its Order dated 19.07.2012 in petition no. 35 of 2012 (Suo-Motu) had, after due process, adopted the Central Electricity Regulatory Commission (Terms & Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2012 (CERC RE Regulations, 2012) with State specific modifications in respect of Non-fossil fuel based Co-generation Projects and determined generic levellised generation tariff for Renewable Energy Power Projects (RE Projects) for FY 2012-13. Further, the Commission determined the generic levellised generation tariff for such projects for FY 2013-14 vide its Order dated 25.06.2013 in petition no. 37 of 2013 (Suo-Motu). 2. Central Electricity Regulatory Commission (CERC) vide Notification No.L- 1/94/CERC/2011 dated 18.03.2014 amended the CERC RE Regulations, 2012 called CERC (Terms & Conditions for Tariff determination from Renewable Energy Sources) (First Amendment) Regulations, 2014 (First Amendment, 2014) wherein certain norms for Biomass Power Projects, including Regulation 34 relating to normative capital cost for such projects were revised. The Commission in its Order dated 05.09.2014 in petition no. 42 of 2014 (Suo-Motu), after due process, adopted the said First Amendment, 2014 partly with regard to normative capital cost for Biomass Power Projects with water cooled condensers only and determined the generic levellised generation tariff for RE Projects to be commissioned in FY 2014-15, considering the same and CERC RE Regulations, 2012 adopted by it in its Order dated 19.07.2012 with State specific modifications. 3. CERC has, in due discharge of the mandate under Regulation 8 of the CERC RE Regulations, 2012 determined the generic levellised generation tariff of RE Projects for the fourth year (FY 2015-16) of the control period in its Order dated 31.03.2015 in petition no. SM/004/2015 (Suo-Motu). The said First Amendment, 2014 and the Order dated 31.03.2015 are available on the CERC website www.cercind.gov.in. Keeping in view the above, the Commission directed that a Staff Paper be prepared for determination of the generic levellised generation tariff for RE Projects for FY 2015-16. Accordingly, the Staff Paper has been prepared. 4. For working out the generic tariff for FY 2015-16 for Biomass Power Projects with water cooled condensers, the normative capital cost has been proposed as 558.705 Lakh/MW after applying indexation mechanism specified in CERC RE 1
Regulations, 2012 on the normative capital cost of 544.19 Lakh/MW for FY 2014-15 determined by the Commission in its Order dated 05.09.2014, which is same as fixed by CERC in its Order dated 31.03.2015. Rest of the parameters/norms including the biomass fuel price fixed as 3500.42 per MT for FY 2015-16 considering the escalation as per the fuel price indexation mechanism specified in Regulation 45 of CERC RE Regulations, 2012 are the same as specified in these regulations adopted by the Commission as brought out in para 1 & 2 above. Further, it is proposed that in case a developer intends to set up a Biomass Power Project with air-cooled condenser, it may approach the Commission for tariff applicability/determination for its project. The same should, however, be duly approved by Punjab Energy Development Agency (PEDA). Similarly, if a developer wishes to set up a Biomass Power Project with proven technology for exclusive use of rice straw, it may approach the Commission for tariff applicability / determination for its project. The proven technology for exclusive use of rice straw should be duly approved by PEDA. 5. As regards the proposal for working out generic tariff for Non-fossil fuel based Co-generation Projects for FY 2015-16, the normative capital cost and other parameters/norms are as per CERC RE Regulations, 2012 adopted by the Commission with State specific modifications in respect of such projects in its Order dated 19.07.2012. In the said Order, the Commission had decided to continue with the PLF for Non-fossil fuel based Co-generation Projects specified as 80% (based on number of operating days fixed as 292 days) specified in its Order dated 30.09.2010 in petition no. 32 of 2010 (Suo-Motu) after giving detailed justification, as against 53% PLF specified in CERC RE Regulations, 2012 for such projects for the State. Further, in the same Order, out of 292 days of operation in a year for such projects, the Commission had also re-fixed the number of operating days on bagasse as 100 days [80 days (crushing) + 25% i.e. 20 days (off-season)] and for the remaining 192 days (out of 292 days), such plants would operate on biomass fuel. Accordingly, the tariff for Non-fossil fuel based Co-generation Projects for FY 2012-13 was arrived at on the basis of weighted average of various parameters for bagasse and biomass including the weighted average cost of biomass fuel mix which worked out to 2357 per MT for FY 2012-13. The biomass fuel mix price for FY 2013-14 and FY 2014-15 was worked out as 2525.56 per MT and 2801.11 per MT respectively after applying the indexation mechanism specified in CERC RE Regulations, 2012. The biomass fuel mix price for Non-fossil fuel based Co-generation Projects for FY 2015-16 has been similarly worked out as 2993.65 per MT by applying the ibid indexation mechanism. 2
6. In respect of Biomass Gasifier Power Projects, Biogas based Power Projects (where the fuel cost is proposed to be same as specified in CERC Order dated 31.03.2015), Small Hydro Projects and Solar Power Projects (PV and Thermal), the tariffs determined by CERC in its Order dated 31.03.2015 are proposed to be applicable. It has been brought out in the said CERC Order that benefit of Depreciation is not available for Small Hydro Projects and tariff without this benefit will be applicable for such projects. As regards tariff for Wind Energy Projects, as per the Wind Power Density Map in the Indian Wind Atlas published by Centre for Wind Energy Technology in August 2010, there is no installable potential for wind energy in the State. In the event of such a project being established, tariff for Wind Zone-1 as determined by CERC in its ibid Order is proposed to be applicable. 7. The variable component of tariff for Biomass Power Projects, Non-fossil fuel based Co-generation Projects, Biomass Gasifier Power Projects and Biogas based Power Projects for each year will change based on whether a RE project developer opts for fuel price indexation mechanism or escalation factor of 5% specified in the RE Regulations at the time of signing the PPA. Hence, while calculating the total applicable tariff for such projects for FY 2015-16, levellisation of only fixed component and the variable component for the first year of operation i.e. FY 2015-16, are proposed to be considered. 8. Accordingly, the generic tariffs for the various RE Projects/Technologies to be commissioned during the year 2015-16 are proposed as under: Levellised Fixed Cost Generic Tariff for RE technologies for FY 2015-16 Variable Cost (FY 2015-16) Applicable Tariff Rate Benefit of Depreciation, if availed Net Applicable Tariff Rate upon adjusting for Depreciation benefit (3-4) 1 2 3 4 5 Biomass Power Projects 2.67 4.71 7.38 0.18 7.20 Non-Fossil Fuel based Co-Generation Projects 2.21 4.34 6.55 0.14 6.41 Biomass Gasifier Power Projects 2.66 4.86 7.52 0.13 7.39 Biogas based Power Projects 3.57 4.29 7.86 0.26 7.60 3
Particulars Applicable Tariff Rate Benefit of Depreciation, if availed 1 2 3 4 Small Hydro Power Projects Net Applicable Tariff Rate upon adjusting for Depreciation benefit (2-3) Below 5 MW 5.47 - - 5 to 25 MW 4.65 - - Wind Energy Power Projects Wind Zone-1 6.58 0.71 5.87 Solar Power Projects Solar PV 7.04 0.69 6.35 Solar Thermal 12.05 1.25 10.80 9. Para 6.4 (2) of the Tariff Policy notified on 06.01.2006 by the Ministry of Power, Govt. of India, provides for procurement of future requirement of electricity from renewable sources of energy, as far as possible, through competitive bidding process under section 63 of the Electricity Act, 2003. In view of the said provision of the Tariff Policy, the Commission had in its Order dated 05.09.2014 applicable for FY 2014-15 held as under: Accordingly, the Commission decides that if tariff based competitive bids are invited for purchase of electricity from RE Power Projects and the per unit tariff offered by the lowest bidder is less than the aforementioned tariff, a petition shall be filed by the procurer for consideration and adoption of tariff by the Commission under Section 63 of the Electricity Act, 2003. The Commission further decides that till such time tariff based competitive bidding is resorted to, bidding may be carried out on the basis of discount to be offered by the prospective bidders on the generic tariffs determined by the Commission in this Order, which would be the maximum/ceiling tariff for the purpose. years as well. It is proposed that the above decision may be made applicable for future 10. In accordance with Regulation 22 of the CERC RE Regulations, 2012, any incentive or subsidy offered by the Central or State Governments if availed by the generating company for the renewable energy power plant(s), is to be deducted while determining tariff. Therefore, any subsidy including capital subsidy/central Financial Assistance or Generation based Incentive (which is a substitute for accelerated depreciation benefit) available to the developer shall require to be passed on to the utilities on actual disbursement basis. Although per unit reduction on account of accelerated depreciation benefit has been quantified, reduction in tariff on account of 4
other incentives and subsidies has not been specified. Accordingly, the aforementioned tariffs are proposed to be reduced suitably on this account. Further, sharing of CDM benefits will be as per the CERC RE Regulations, 2012. 11. The tariff period as per the CERC RE Regulations, 2012 is as under: S. No. Renewable Energy Projects Tariff Period Useful Life (Years) (Years) 1 Biomass 13* 20 2 Non-fossil fuel Co-generation 13* 20 3 Small Hydro (Below 5 MW) 35 35 4 Small Hydro (5 to 25 MW) 13* 35 5 Solar PV and Solar Thermal 25 25 6 Wind Energy 13* 25 7 Biomass gasifier 20 20 8 Biogas 20 20 * Minimum Period -0-5