3rd Floor, Chanderlok Building, 36-Janpath, New Delhi-110001
Tel. No. 23353503, Fax No. 23753923
Website : www.cercind.gov.in
New Delhi, the 17th September, 2009
PRESS RELEASE
CERC notifies tariff regulations for green power
CERC has notified the tariff regulations for electricity generated from
renewable energy sources. These regulations have been finalized keeping in view
the statutory mandate to Electricity Regulatory Commissions for promoting cogeneration
and generation of electricity from renewable sources of energy. The
Tariff Policy had also mandated CERC to lay down guidelines for pricing non-firm
power, especially from non-conventional sources to be followed in cases where
such procurement is not through competitive bidding.
2. These regulations assume special importance in view of the National Action
Plan on Climate Change which stipulated that minimum renewable purchase
standards may be set at 5% of the total power purchases in year 2010 and thereafter
should increase by 1% each year for ten years. The new tariff regulations are
expected to promote new investments so that renewable electricity supply could
expand to meet the goals stipulated in the National Action Plan.
3. Specifying capital cost norms and fixing tariff upfront for the whole tariff
period are the two main features of the new regulations. The regulations provide
normative capital costs for projects based on different renewable technologies.
These capital costs are to be revised every year for incorporating the relevant
escalations. The norms themselves would be reviewed in the next control period
which will start after a period of three years. However, the regulations has enabling
provisions to review the capital cost norms for solar power projects every year in
view of the fact that the costs for these technologies are expected to decline more
rapidly.
4. However, the tariff permitted to a project under these regulations would
apply for the whole tariff period which is 13 years. The tariff period for solar
power has been kept as 25 years and for small hydro below 5 MW, it has been kept
as 35 years in view of the special considerations required for these technologies.
This feature of upfront tariff for whole tariff period is a major initiative to ensure
regulatory certainty.
5. Tariff philosophy in these regulations is to give a preferential tariff to the
projects based on renewable technologies during the period of debt repayment.
Preference has been given mainly in respect of return on equity, shorter loan
repayment period, higher normative interest on loan. Thereafter, these projects are
expected to sale power through competitive route.
6. Tariff model adopted is levellized tariff in order to avoid front loading of
tariff while at the same time ensuring adequate project IRR.
7. These regulations also provide that in case of solar power which is
comparatively an evolving technology and also for other new technologies such as
municipal waste based generation, the project developer can also approach
Commission for a project specific tariff.
8. The Forum of Regulators has also agreed to implement Renewable Energy
Certificate (REC) mechanism which will be an alternative route for fulfilling
renewable purchase obligations. This mechanism is mainly aimed at addressing the
mismatch between renewable resources availability in the local region and the
renewable purchase obligations. CERC would play a supportive role for designing
and regulating national level REC registry and REC market.
9. Further, in order to address the technical problems relating to absorption of
large volumes of non-firm power such as wind in the grid, CERC has constituted
an expert task force which has representation from Central Electricity Authority,
States, System Operator and C-WET. The Task Force has been mandated to give
recommendations in respect of forecasting of generation from these technologies,
ensuring grid reliability and equitable sharing of costs involved in ensuring reliable
operations. The Task Force would also recommend appropriate grid connectivity
standards for renewable sources based generating stations.
Sd/-
(Alok Kumar)
Secretary
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