Open Access Financial Modelling Feasibility

OPEN ACCESS-
FINANCIAL MODELING OF 1MW BAGASSE BASED CO-GEN

POWER PROJECT
Open Access: Issues, Provisions, Policies and Charges in Maharashtra and Financial Modeling of
1 MW bagasse based Co-gen power project in Maharashtra
LIST OF ABBREVIATIONS
Abbreviation Meaning
APR Annual Performance Report
ARR Average Revenue Requirement
ATE Hon‟ble Appellate Tribunal of Electricity
CERC Central Electricity Regulatory Commission
CSS Cross Subsidy Surcharge
CTU Central Transmission Utility
DDG Decentralized Distribute Generation
DSCR Debt Service Coverage Ratio
EA- 2003 The Electricity Act 2003
GCV Gross Calorific Value
HT High Tension
IEGC Indian Electricity Grid Code
IRR Internal Rate of Return
KERC Karnataka Electricity Regulatory Commission
LT Low Tension
LTOA Long Term Open Access
MAT Minimum Alternate Tax
MERC Maharashtra Electricity Regulatory Commission
MSEDCL Maharashtra State Electricity Distribution Company Limited
MSLDC Maharashtra State Load Despatch Centre
MTOA Medium Term Open Access
MU Million Units
NAPCC National Action Plan for Climate Change
NEP National Electricity Policy
NLDC National Load Despatch Centre
NPV Net Present Value
NTP National Tariff Policy
O&M Operation and Maintenance
RE Renewable Energy
RInfra-D Reliance Infrastructure Company Limited- Distribution
RLDC Regional Load Despatch Centre
SERC State Electricity Regulatory Commission
SLDC State Load Despatch Centre
STOA Short Term Open Access
STU State Transmission Utility
TPC-D Tata power Company- Distribution
WACC Weighted Average Cost of Capital
Page ii
LIST OF TABLES
Table 1: Open Access charges: Wheeling charges and Wheeling Losses for MSEDCL ............. 23
Table 2: Open Access charges: Wheeling charges and Wheeling Losses for TPC-D .................. 24
Table 3: Open Access charges: Wheeling charges and Wheeling Losses for RInfra-D ............... 24
Table 4: Open Access charges: Transmission Charges ................................................................ 25
Table 5: Open Access charges: CSS for MSEDCL ...................................................................... 27
Table 6: Open Access charges: CSS for TPC-D........................................................................... 30
Table 7: Open Access charges: CSS for RInfra-D........................................................................ 31
Table 8: Case 1: Power procurement via open access .................................................................. 33
Table 9: Case 2: Power Procurement via Discom ........................................................................ 33
Table 10: Renewable Energy Potential in India ........................................................................... 47
Table 11: State wise renewable energy potential in India ............................................................ 49
Table 12: Bagasse cogeneration in Maharashtra .......................................................................... 50
Table 13: Comparison of Low- with High-Temperature and -Pressure Boilers ........................... 51
Table 14: Operating days for a cogeneration plant ....................................................................... 52
Table 15: Financial Assumptions.................................................................................................. 53
Table 16: Tax related Financial Assumptions .............................................................................. 53
Table 17: Working Capital Assumptions ...................................................................................... 53
Table 18: Fuel related assumptions............................................................................................... 53
Table 19: Operations and Maintenance assumptions ................................................................... 54
Table 20: Project Economics of a bagasse power plant ................................................................ 54
Table 21: Debt Equity ratio v/s Levelised Tariff v/s Project IRR ................................................ 55
Table 22: Plant Load Factor v/s Levelised Tariff ......................................................................... 56
Table 23: Project capital cost v/s Tariff ........................................................................................ 57
Table 24: Fuel Price Variation v/s Levelised Tariff ..................................................................... 58
Table 25: Net generation................................................................................................................ A
Table 26: Variable cost ...................................................................................................................B
Table 27: Return on Equity.............................................................................................................C
Table 28: Interest on Loan Capital................................................................................................. D
Page iii
Table 29: Depreciation.................................................................................................................... E

Table 30: O&M cost ....................................................................................................................... F
Table 31: Net working capital........................................................................................................ G
Table 32: Fixed cost calculation .................................................................................................... H
Table 33: Income Tax ...................................................................................................................... I
Table 34: Tariff determination.........................................................................................................J
Table 35: NPV and IRR calculations............................................................................................. K
Table 36: DSCR.............................................................................................................................. L
LIST OF FIGURES
Figure 1: Advantages of Open Access in Renewable Energy ...................................................... 35
Figure 2: Maharashtra State provisions for promotion of Open Access in RE............................. 38
Figure 3: State level Open Access provisions for Renewable Energy.......................................... 39
Figure 4: The Bagasse cogeneration process ................................................................................ 50
LIST OF CHARTS
Chart 1: Renewable energy potential state wise ........................................................................... 49
Chart 2: Impact of Capital Mix on Tariff...................................................................................... 56
Chart 3: Impact of PLF on Tariff .................................................................................................. 57
Chart 4: Impact of project cost on Tariff ...................................................................................... 58
Chart 5: Impact of Fuel price variation on Tariff ......................................................................... 59
TABLE OF CONTENTS
Declaration ............................................................................................................................................. ii
Executive Summary .............................................................................................................................. iv
List of Abbreviations ............................................................................................................................ vi
List of Tables ....................................................................................................................................... vii
List of Figures .....................................................................................................................................viii
Page iv
Lis of Charts ........................................................................................................................................viii
Table of Contents ................................................................................................................................... 1
CHAPTER 1: INTRODUCTION .......................................................................................................... 6
1.1 Problem Statement .................................................................................................................. 6
1.2 Significance of the project ...................................................................................................... 6
1.3 Scope of work ......................................................................................................................... 7
1.3.1 Provisions for Open Access ............................................................................................ 7
1.3.2 Calculation of Open Access charges ............................................................................... 7
1.3.3 Viability of Long Term distribution Open Access .......................................................... 7
1.3.4 Open Access and Renewable Energy .............................................................................. 7
1.3.5 Identification and removal of impediments .................................................................... 7
1.3.6 Determination of Tariff for 1 MW bagasse based cogeneration power project .............. 7
1.3.7 Sensitivity Analysis of Tariff .......................................................................................... 8
1.4 Literature Review ................................................................................................................... 8
1.5 Research Methodology ........................................................................................................... 8
CHAPTER 2: OPEN ACCESS IN INDIAN POWER SECTOR ........................................................ 10
2.1 Provisions for Open Access in The Electricity Act, 2003 .................................................... 10
2.1.1 Section 2(47)-Definition of open access ....................................................................... 10
2.1.2 Open Access in Transmission: ...................................................................................... 10
2.1.3 Open Access in Distribution ......................................................................................... 13
2.1.4 Section 49: Agreements with respect to supply or purchase of electricity.................... 14
2.1.5 Section 86: Functions of State Commission ................................................................. 14
2.2 Provision For Open Access In National Electricity Policy ................................................... 14
2.2.1 Section 5.4.5.................................................................................................................. 14
2.3 Provision For Open Access In National Tariff Policy .......................................................... 14
2.3.1 Section 8.5.1.................................................................................................................. 14

2.3.2 Section 6.3..................................................................................................................... 15
2.3.3 Section 6.4..................................................................................................................... 15
2.3.4 Section 8.5..................................................................................................................... 15
CHAPTER 3: OPEN ACCESS CHARGES ........................................................................................ 16
3.1 Cross Subsidy Surcharge ...................................................................................................... 16
3.1.1 Policy provisions for Cross Subsidy Surcharge ............................................................ 16
Page v
3.1.2 Alternative approaches for determining the Cross Subsidy Surcharge ......................... 17
3.2 Additional Surcharge ............................................................................................................ 18
3.2.1 Policy provisions for Additional Surcharge .................................................................. 18
3.2.2 Objectives and Principles for Additional Surcharge ..................................................... 18
3.2.3 Approach Towards Calculation Of Additional Surcharge ............................................ 18
3.3 Transmisson Charges And Transmission Losses ................................................................. 19
3.3.1 Policy provisions for Transmission Charges and Transmission Losses ........................ 19
3.3.2 Principles and Key Considerations ............................................................................... 19
3.3.3 Approaches toward Transmission Charges and Transmission Loss determination ...... 19
3.4 Wheeling Charges And Distribution Losses......................................................................... 20
3.4.1 Introduction ................................................................................................................... 20
3.4.2 Methodology for allocation of Wheeling charges ......................................................... 20
3.4.3 Applicability of Transmission and Wheeling Charges.................................................. 20
3.4.4 Case of Multiple Licensees ........................................................................................... 21
3.5 Other Charges ....................................................................................................................... 22
3.5.1 Default Supply Charges ................................................................................................ 22
3.5.2 Balancing Market Charges ............................................................................................ 22
CHAPTER 4: OPEN ACCESS CHARGES IN MAHARASHTRA ................................................... 23
4.1 Introduction .......................................................................................................................... 23
4.2 Wheeling Charges ................................................................................................................. 23
4.2.1 Wheeling Charges for MSEDCL .................................................................................. 23
4.2.2 Wheeling Charges for TPC-D ....................................................................................... 24
4.2.3 Wheeling Charges and Wheeling Losses for RInfra-D................................................. 24
4.3 Transmission Charges and Transmission Losses.................................................................. 24
4.3.1 Transmission Charges ................................................................................................... 24

4.3.2 Transmission Losses ..................................................................................................... 25
4.4 Cross Subsidy Surcharge ...................................................................................................... 25
4.4.1 CSS for MSEDCL ......................................................................................................... 25
4.4.2 CSS for TPC-D ............................................................................................................. 28
4.4.3 CSS for RInfra-D .......................................................................................................... 30
4.5 Viability of Intra-State Long Term Open Access ................................................................. 31
CHAPTER 5: RENEWABLE ENERGY AND OPEN ACCESS ....................................................... 34
Page vi
5.1 Introduction .......................................................................................................................... 34
5.2 Need and Importance of Open Access in Renewable Energy .............................................. 34
5.3 National Level Provision for Open Access in RE ................................................................ 35
5.3.1 Electricity Act, 2003 ..................................................................................................... 35
5.3.2 National Electricity Policy, 2005 .................................................................................. 35
5.3.3 Rural Electrification Policy, 2006 ................................................................................. 35
5.3.4 Rajiv Gandhi Grameen Vidyutikaran Yojana ............................................................... 36
5.3.4 IEGC provisions ............................................................................................................ 36
5.3.5 Green corridor concept.................................................................................................. 37
5.4 State level Open Access provisions ...................................................................................... 37
5.4.1 Transmission charges and Loss calculations................................................................. 37
5.4.2 Cross Subsidy Surcharge (CSS) .................................................................................... 37
5.4.3 Wheeling Charges ......................................................................................................... 38
5.4.5 Banking Provisions ....................................................................................................... 38
CHAPTER 6: IMPEDIMENTS IN IMPLEMENATATION OF OPEN ACCESS ............................ 40
6.1 Discom perspective ............................................................................................................... 40
6.1.1 Revenue Loss ................................................................................................................ 40
6.1.2 Forced Universal Service Obligation ............................................................................ 40
6.1.3 Determination of Cross Subsidy Surcharge for Open Access consumers..................... 40
6.1.4 Capacity building at SLDC ........................................................................................... 40
6.1.5 Ring fencing of SLDC .................................................................................................. 40
6.1.6 Shifting burden on Low end consumers........................................................................ 40
6.1.7 Partial Open Access ...................................................................................................... 40
6.2 Regulatory and Legal perspective......................................................................................... 41

6.2.1 Regulatory Balance ....................................................................................................... 41
6.2.2 Deregulation of Industrial Tariff ................................................................................... 41
6.3 Consumer perspective ........................................................................................................... 42
6.3.1 Irrational Temporary Tariff ........................................................................................... 42
6.3.2 Power Purchase ............................................................................................................. 42
6.3.3 Eligibility Criteria ......................................................................................................... 42
6.3.4 Operational Issues ......................................................................................................... 42
6.3.5 Wheeling Capacity ........................................................................................................ 43
Page vii
6.3.6 Segregation of Wires and Supply cost .......................................................................... 43
6.3.7 Availability of spinning reserve/Non bonded power .................................................... 43
6.3.8 Assurance of Supply ..................................................................................................... 43
6.3.9 Limit on the demand ..................................................................................................... 43
6.3.10 High Cross Subsidy Surcharge...................................................................................... 43
6.3.11 Congestion in the Transmission Link ........................................................................... 44
6.3.12 Reduction in Contract Demand ..................................................................................... 44
6.3.13 Stand-by-charges for drawl of power by Open Access consumer from the grid .......... 44
CHAPTER 7: FINANCIAL MODELING (1MW BAGASSE PLANT)............................................ 45
7.1 Introduction .......................................................................................................................... 45
7.2 Renewable energy scenario in India ..................................................................................... 45
7.3 Renewable Energy Support Framework ............................................................................... 46
7.4 Renewable energy scenario in Maharashtra ......................................................................... 47
7.5 Bagasse ................................................................................................................................. 47
7.6 Bagasse as fuel...................................................................................................................... 47
7.7 Cogeneration in sugar mills using Bagasse as fuel ............................................................... 48
7.8 Bagasse cogeneration potential in India ............................................................................... 48
7.9 Bagasse cogeneration scenario in Maharashtra .................................................................... 50
7.10 Bagasse Cogeneration- A Technical Overview ................................................................ 50
7.11 Tariff determination for Bagasse cogeneration plant in Maharashtra ............................... 51
7.12 Assumptions for Tariff determination............................................................................... 51
7.12.1 Capital costs .................................................................................................................. 51
7.12.2 Power Generation .......................................................................................................... 52

7.12.3 Financial Assumptions .................................................................................................. 52
7.13 Project Economics and Financial Indicators ..................................................................... 54
7.14 Sensitivity Analysis .......................................................................................................... 55
7.14.1 Sensitivity Analysis of Capital mix:.............................................................................. 55
7.14.2 Sensitivity Analysis of Plant Load Factor:.................................................................... 56
7.14.3 Sensitivity Analysis of Plant Capital Cost .................................................................... 57
7.14.4 Sensitivity analysis of Fuel Price variation ................................................................... 58
CHAPTER 8: CONCLUSIONS AND RECOMMENDATIONS ....................................................... 60
8.1 Open Access: Conclusions and Recommendations .............................................................. 60
Page viii
8.1.1 Conclusions ................................................................................................................... 60
8.1.2 Recommendations ......................................................................................................... 60
8.2 Financial Modelling: Conclusions and Recommendations .................................................. 63
8.2.1 Conclusions ................................................................................................................... 63
8.2.2 Recommendations ......................................................................................................... 64
BIBLIOGRAPHY ................................................................................................................................ 65
Annexure A: Units generated in Bagasse Cogen plant ................................................................ A
Annexure B: Variable Cost for Bagasse Cogen plant.................................................................. B
Annexure C: Return on Equity .................................................................................................... C
Annexure D: Interest on Loan Capital ......................................................................................... D
Annexure E: Depreciation calculation......................................................................................... E
Annexure F: Operation and Maintenance Expenses.....................................................................F
Annexure G: Net Working Capital .............................................................................................. G
Annexure H: Fixed Cost calculation ............................................................................................ H
Annexure I: Income Tax calculations ...........................................................................................I
Annexure J: Levellised Tariff ...................................................................................................... J
Annexure K: NPV and IRR calculations...................................................................................... K
Annexure L: Debt Service Coverage Ratio ................................................................................. L
Page ix
CHAPTER 1: INTRODUCTION
1.1 Problem Statement
The Indian power sector is divided into the three main businesses of generation,
transmission and distribution. The generation sector is widely competitive with involvement of
the private sector into. The transmission sector is widely operated by Power Grid Corporation of
India Limited, which is a 100% government subsidiary, owing to the large amount of investment
needed in the infrastructure; the government holds the monopoly in this business segment.
However, the final leg in the electricity sector of the distribution can be privatized and can
promote competition in the industry in order to make consumer the ultimate beneficiary. With
the very same intent mechanism of Open Access was introduced in the EA-2003. The sad part of
the story is that the mechanism could not be as effective as desired by the policy makers due to
various hurdles.
I, as a young professional in this internship have tried to identify these road-blocks and
have given some recommendations which may prove to be helpful for effective implementation
of this revolutionary mechanism which makes the consumer the ultimate winner.
India has always relied on the conventional sources of energy and a result of which is
accelerated depletion of the natural resources such as coal, natural gas, etc. It is about time that
investments should be made in the renewable sector and thus I have done a financial modeling of
1 MW bagasse based cogeneration power plant. The only dilemma in the mind of any investor is
about the return of the investment he has made in any project.
Also, what all factors affect the tariff and by how much should be known to the power
producer for which sensitivity analysis has to be done.
1.2 Significance of the project
Open Access has been widely recognized as the soul of the Electricity Act. This is so
because open access is the mechanism crafted to usher in competition and choice, and in turn
facilitate investments and protect interests of the consumers. However, this move hasn‟t attracted
many consumers to enroll them in this scheme. It is a double edged sword for the regulators in
the country, on one side the Act mandates them to introduce and promote competition in the
industry and on the other, the consumers form the default distribution company are burdened
with extra costs because big industrial consumers when opt for open access, the losses have to
borne by them small domestic consumer. The project is significant in identifying and
subsequently giving some radical solutions to the various impediments in the implementation of
Open Access.
Page 6
Further, the second part of the project deals with the financial modeling of a 1 MW
bagasse based cogeneration power plant. The main significance of this part of the project is in
attracting investments in this source of energy. Calculations have shown a high NPV and IRR
which should be attracting the investors in this business.
1.3 Scope of work
1.3.1 Provisions for Open Access
To promote Open Access at both national and state level, there are umpteen numbers of
provisions in the respective legislature; an analysis of different policies is done.
1.3.2 Calculation of Open Access charges
Open Access charges in accordance to various regulations and referring different tariff
orders is calculated. The charges specific to Maharashtra state have been calculated for different
distribution companies.
1.3.3 Viability of Long Term distribution Open Access
Viability of Long Term Open Access is studied on the basis of calculation made form a
consumer perspective and a decision is made whether a consumer should opt for the open access
mechanism or should rather continue to procure power from the local distribution company.
1.3.4 Open Access and Renewable Energy
State level and national level provisions for the integration of Open Access mechanism
and renewable energy are studied and a comprehensive compilation is made comparing the
policies of different states.
1.3.5 Identification and removal of impediments
Identification of various road blocks in the proper implementation of Open Access is

done and further recommendations are made for their removal.
1.3.6 Determination of Tariff for 1 MW bagasse based cogeneration power project
Adhering to the determination of tariff for renewable energy regulations by MERC, tariff
is determined for the above mentioned power project.
Page 7
1.3.7 Sensitivity Analysis of Tariff
The model so obtained in the previous step is used to find the variation in the cost of
generation for different values of capital costs, O&M expenses, plant load factors/ capacity
utilization factors and fuel prices.
1.4 Literature Review
Chatterjee and Kumar (2012) had studied the then prevalent scenario of the Indian power
sector and have comprehensively expressed their views in their book published by the Oxford
Publishing House. Both the authors have held a strong view in favour of implementing Open
Access mechanism in the Indian scenario. However, they have also identified impediments in its
implementation and have also addressed the issue of regulatory commissions‟ dilemma in
introducing the above mentioned mechanism.
Commission‟s Orders have been of major application in this project. Every case that is
admitted in the commission is given the due hearings and further the Commission passes an
order which is published on its website for any public reference. These orders apart from solving
the Case which they are associated with also serve as a learning medium for students and
professionals alike. Many orders have been carefully studied and analysed for the preparation of
this report.
Annual reports of various utilities, for example, Ministry of New and Renewable Energy,
Ministry of Power, Tata Power Company, etc are banks of useful information. Verified and
dependable data has been extracted from such reports and has been used in the preparation of this
report.
Commission regulations for determination of tariff and for distribution Open Access have
been referred in an exhaustive manner. These regulations serve as guiding light for tariff
determination and for studying the various provisions for Open Access in the state of
Maharashtra.
1.5 Research Methodology
The various steps involved in the process of carrying out the research are analysis of
previous reports, collection of secondary data, Validation of the collected data, analysis of
various tariff orders, establishment of tariff calculation models for different states and then
analysis of the gap.
Page 8
Collection of secondary data
As the data needed for the research was confidential to any power project, primary data
collection didn‟t elicit any response from the stakeholders. So, secondary data collection
was resorted to.
Validation of the collected data

The secondary data collected were analyzed for their validity and extreme values which
didn‟t fit in were discarded. Then the most appropriate values were selected after
analyzing the authenticity and relevance of the source.
Determination of Tariff and subsequent analysis

The tariff is determined according to the regulations issued by the Commission and a
subsequent sensitivity analysis is performed on the basis of previous experience in the
market.
Page 9
CHAPTER 2: OPEN ACCESS IN INDIAN POWER SECTOR
In the context of competition, open access is the corner-stone of the Act. Open Access has been
conceived as an important tool of introducing competition in the electricity industry and ensuring
choice to buyers and suppliers of electricity.
Open access has been envisaged in the Electricity Act, 2003 (EA 2003) as a framework for
encouraging competition in the electricity sector and for enabling consumers to choose their
suppliers. The Act provides for non-discriminatory open access in transmission from the outset.
In distribution, open access is to be introduced in phases by the State Commissions with due
consideration of operational constraints and payment if surcharges.
The National Electricity Policy and Tariff Policy framed under the Act lay emphasis on proper
implementation of this competitive framework which has the potential of:
(I) Desired market signal for investment;

(II) Inducing improved service from the existing utilities; and
(III) Enabling consumers to get power from any source of their choice.
The Central Electricity Regulatory Commission (CERC) has framed regulations on inter-State
open access. There have been large numbers of transactions involving the generating companies,
traders and distribution companies through open access in inter-State transmission. At the State
level, regulations have been framed by the State Commissions, phasing out open access for
consumers. Transmission charges, wheeling charges and surcharge have also been determined by
most SERCs.
2.1 PROVISIONS FOR OPEN ACCESS IN THE ELECTRICITY ACT, 2003
2.1.1 Section 2(47)-Definition of open access:
“non-discriminatory provision for the use of transmission lines or distribution system or

associated facilities with such lines or system by any licensee or consumer or a person engaged
in generation in accordance with the regulations specified by the Appropriate Commission”.
2.1.2 Open Access in Transmission:
Section 38 of the Act, which deals with the CTU and its functions, provides as follows:
“(1) The Central Government may notify any Government Company as the Central Transmission
Utility:
Page 10
(2) The functions of the Central Transmission Utility shall be –
(d) to provide non-discriminatory open access to its transmission system for use by-
(i) any licensee or generating company on payment of the transmission charges; or
(ii) any consumer as and when such open access is provided by the State Commission under sub-
section (2) of section 42, on payment of the transmission charges and a surcharge thereon, as
may be specified by the Central Commission:
Provided that such surcharge shall be utilised for the purpose of meeting the requirement of
current level cross-subsidy:
Provided further that such surcharge and cross subsidies shall be progressively reduced in the
manner as may be specified by the Central Commission:
Provided also that the manner of payment and utilisation of the surcharge shall be specified by
the Central Commission:
the Central Commission:
Provided also that such surcharge shall not be leviable in case open access is provided to a
person who has established a captive generating plant for carrying the electricity to the
destination of his own use.”
Section 39 of the Act deals with the STU and its functions and provides as follows:
“(1) The State Government may notify the Board or a Government Company as the State
Transmission Utility:
Provided that the State Transmission Utility shall not engage in the business of trading in
electricity:
(2) The functions of the State Transmission Utility shall be –
(d) to provide non-discriminatory open access to its transmission system for use by-
(i) any licensee or generating company on payment of the transmission charges; or (ii) any
consumer as and when such open access is provided by the State Commission under sub-section
(2) of section 42, on payment of the transmission charges and a surcharge thereon, as may be
specified by the Central Commission:
Page 11
manner as may be specified by the State Commission:
the State Commission:
destination of his own use.”
Section 40 of the Act reads as follows:
“It shall be the duty of a transmission licensee –
(a) to build, maintain and operate an efficient, co-ordinated and economical inter-State
transmission system or intra-State transmission system, as the case may be;
(b) to comply with the directions of the Regional Load Despatch Centre and the State Load
Despatch Centre as the case may be;
(c) to provide non-discriminatory open access to its transmission system for use by-
(i) any licensee or generating company on payment of the transmission charges; or
(ii) any consumer as and when such open access is provided by the State Commission under sub-
section (2) of section 42, on payment of the transmission charges and a surcharge thereon, as
may be specified by the State Commission:
manner as may be specified by the Appropriate Commission:
the Appropriate Commission:
destination of his own use.
Page 12
2.1.3 Open Access in Distribution
Section 42 of the Act deals with the provision of open access to distribution and reads as
follows:
“(2) The State Commission shall introduce open access in such phases and subject to such
conditions, (including the cross subsidies, and other operational constraints) as may be specified
within one year of the appointed date by it and in specifying the extent of open access in
successive phases and in determining the charges for wheeling, it shall have due regard to all
relevant factors including such cross subsidies, and other operational constraints:
Provided that such open access shall be allowed on payment of a surcharge in addition to the
charges for wheeling as may be determined by the State Commission:
Provided further that such surcharge shall be utilised to meet the requirements of current level of
cross subsidy within the area of supply of the distribution licensee:
Provided also that such surcharge and cross subsidies shall be progressively reduced in the
manner as may be specified by the State Commission:
destination of his own use:
Provided also that the State Commission shall, not later than five years from the date of
commencement of the Electricity (Amendment) Act, 2003, by regulations, provide such open
access to all consumers who require a supply of electricity where the maximum power to be
made available at any time exceeds one megawatt.
(3) Where any person, whose premises are situated within the area of supply of a distribution
licensee, (not being a local authority engaged in the business of distribution of electricity before
the appointed date) requires a supply of electricity from a generating company or any licensee
other than such distribution licensee, such person may, by notice, require the distribution licensee
for wheeling such electricity in accordance with regulations made by the State Commission and
the duties of the distribution licensee with respect to such supply shall be of a common carrier
providing non-discriminatory open access
(4) Where the State Commission permits a consumer or class of consumers to receive supply of
electricity from a person other than the distribution licensee of his area of supply, such consumer
shall be liable to pay an additional surcharge on the charges of wheeling, as may be specified by
the State Commission, to meet the fixed cost of such distribution licensee arising out of his
obligation to supply.”
Page 13
2.1.4 Section 49: Agreements with respect to supply or purchase of electricity
" Where the Appropriate Commission has allowed open access to certain consumers under
section 42, such consumers notwithstanding the provisions contained in clause (d) of sub-section
(1) of section 62, may enter into an agreement with any person for supply or purchase of
electricity on such terms and conditions (including tariff) as may be agreed upon by them.”
2.1.5 Section 86: Functions of State Commission
"(1) The State Commission shall discharge the following functions, namely:
(a) determine the tariff for generation, supply, transmission and wheeling of electricity,
wholesale, bulk or retail, as the case may be, within the State:
Provided that where open access has been permitted to a category of consumers under section 42,
the State Commission shall determine only the wheeling charges and surcharge thereon, if any,
for the said category of consumers;"
2.2 PROVISION FOR OPEN ACCESS IN NATIONAL ELECTRICITY POLICY, 2005
2.2.1 Section 5.4.5
The Electricity Act 2003 enables competing generating companies and trading licensees,
besides the area distribution licensees, to sell electricity to consumers when open access in
distribution is introduced by the State Electricity Regulatory Commissions. As required by the
Act, the SERCs shall notify regulations by June 2005 that would enable open access to
distribution networks in terms of sub-section 2 of section 42 which stipulates that such open
access would be allowed…
Section 49 of the Act provides that such consumers who have been allowed open access
under section 42 may enter into agreement with any person for supply of electricity on such
terms and conditions, including tariff, as may be agreed upon by them.
While making regulations for open access in distribution, the SERCs will also determine
wheeling charges and cross-subsidy surcharge as required under section 42 of the Act.
2.3 PROVISION FOR OPEN ACCESS IN NATIONAL TARIFF POLICY
2.3.1 Section 8.5.1
“A consumer who is permitted open access will have to make payment to the generator,
the transmission licensee whose transmission systems are used, distribution utility for the heeling
charges and in addition, the cross subsidy surcharge. The computation of cross subsidy
surcharge, therefore, needs to be done in a manner that while it compensates the distribution
licensee, it does not constrain introduction of competition through open access…….”
Page 14
2.3.2 Section 6.3: Harnessing captive generation
Wheeling charges and other terms and conditions for implementation should be
determined in advance by the respective State Commission, duly ensuring that the charges are
reasonable and fair.
Grid connected captive plants could also supply power to non-captive users connected to
the grid through available transmission facilities based on negotiated tariffs. Such sale of
electricity would be subject to relevant regulations for open access.
2.3.3 Section 6.4:

Non- conventional energy sources, including co-generation.
2.3.4 Section 8.5:

calculation of cross subsidy surcharge and additional surcharge for open access.
Page 15
CHAPTER 3: OPEN ACCESS CHARGES

The various applicable open access charges are:
1. Cross Subsidy Surcharge

2. Additional Surcharge
3. Transmission Charges
4. Transmission Loss Compensation
5. Wheeling Charges
6. Wheeling Loss Compensation
7. Default Supply Charge
8. Balancing Market Charge
9. Open Access Application Charges
10. State Load Dispatch Centre Charges
3.1 CROSS SUBSIDY SURCHARGE
The purpose of Cross Subsidy Surcharge (CSS) has been clearly spelt out as a charge to be paid
by the Open Access Consumer to offset, the Cross Subsidy which he would have normally paid
to the Distribution Licensee had he continued to be the consumer of the said Distribution
Licensee.
3.1.1 Policy provisions for Cross Subsidy Surcharge
3.1.1.1 National Electricity Policy

Cross Submitted Surcharge should not be so onerous that it eliminates competition which
is intended through Open Access.
3.1.1.2 National Tariff Policy

Cross Subsidy Surcharge should adequately compensate the Distribution Licensee
i. It should not constraint introduction of competition

ii. Should be beneficial to consumers after adding all the charges
Cross subsidy surcharge mechanism as per NTP:
S=T-[C (1+L/100) + D],
Where,
S= Surcharge
T= Tariff payable by the relevant category of consumers
C= Weighted average of cost of power purchase of top 5% at the margin excluding
renewable power and liquid fuel based generation
D= Wheeling charges
Page 16
L= System loss for the applicable voltage level, expressed as a percentage.
3.1.1.3 Miscellaneous Provisions

 Surcharge should be brought down progressively and as far as possible at linear rate to a
maximum of 20% of opening level by FY-2010-11.
 Surcharge may be collected by the Distribution Licensee or Transmission Licensee or
CTU or STU depending upon whose facilities are used.
 Amount collected should be given to Distribution Licensee in the area of supply.
 In case of multiple licensees, amount should be given to Licensee from whom the
consumer was availing supply.
3.1.2 Alternative approaches for determining the Cross Subsidy Surcharge

There are various approaches that may be adopted in determining the Cross Subsidy
Surcharge these are:
 Avoided Cost of Power (as suggested by the NTP)

 Average Cost of Supply
 Cost of Supply
 Embedded Cost
3.1.2.1 Avoided Cost of Power method

This approach has been adopted by various Electricity Regulatory Commissions such as
Maharashtra, Delhi, Madhya Pradesh, etc. The formula suggests that Weighted Average cost of
power purchase of top 5% at the margin excluding power from renewable power and liquid fuel
based generation. On computation of surcharge using this formula, the CSS comes out negative
for some of the states.
3.1.2.2 Average Cost of Supply

This approach has been adopted by states of Chhattisgarh, Jharkhand. The Chhattisgarh State
Electricity Regulatory Commission has issued an order in this aspect stating that:
 Top 5% of the power purchased at the margin is from the traders. No difference between
the avoided cost and marginal cost methods.
 In a power shortage situation, power purchase is not avoided and the extent of load
shedding is reduced. The rationale for the load shedding reduction is that a reduction
leads to increase in consumption by subsided customers.
3.1.2.3 Cost of supply method

The Cost of supply approach has been adopted by the states of Karnataka and Assam. This
approach clearly suggests that the level of cross subsidy surcharge depends upon the voltage
level at which the consumer is supplied. The KERC has computed the CSS for various
distribution companies as illustrated below.
Page 17
Cross Subsidy Surcharge (Paisa per unit)

Voltage level of the consumer
BESCOM MESCOM CESC HESCOM GESCOM
Extra High Tension 93 62 52 66 86
High Tension 78 34 20 22 67
Table: KERC order for CSS of various discoms
3.2 ADDITIONAL SURCHARGE
The additional surcharge is an extra charge that an Open Access consumer has to pay the utility
to recover the fixed costs towards its stranded capacity.
3.2.1 Policy provisions for Additional Surcharge
3.2.1.1 National Electricity policy

Additional Surcharge should not be so onerous that it eliminates the competition which is
intended through Open Access.

The National Tariff Policy provides for following in regards to Additional Surcharge:
 Additional Surcharge should be applicable only if it is conclusively demonstrated that the

obligation of a licensee in terms of existing power purchase agreements has been and
continues to be stranded ; or
 There is an unavoidable obligation and incidence to bear fixed costs consequent to a
contract
 Fixed costs related to network assets would be recovered through Wheeling Charges.
3.2.2 Objectives and Principles for Additional Surcharge

 To compensate the licensee towards loss of purchasing power in case Licensee is unable
to sell that power
 It is intended to recover other fixed costs of Licensee
 In case of supply shortage situation, there will be no loss licensee and hence may be
specified as zero.
 The obligation is on the licensee to prove that its power purchase commitments have
become stranded.
3.2.3 Approach towards calculation of Additional Surcharge

The additional surcharge has to be calculated on case to case basis if licensee is able to
prove that its commitments have been stranded. Most of the State Electricity Regulatory
Commissions have specified in their regulations or orders that it will be determined on case to
case basis with few exceptions. The Uttrakhand Electricity regulatory Commission in its order
Page 18
has specified that the additional surcharge will be payable by all consumers availing open access,
at the rate equivalent to demand charges for the relevant consumer category.
3.3 TRANSMISSON CHARGES AND TRANSMISSION LOSSES
3.3.1 Policy provisions for Transmission Charges and Transmission Losses

Transmission charges can be determined on MW per circuit km basis, zonal postage
stamp basis or some other pragmatic variant. Objective is to get the transmission system users to
share the total transmission cost in proportion to their respective utilization of the transmission
system.
3.3.2 Principles and Key Considerations

 Most of the State Electricity Regulatory Commissions have determined transmission
charges applicable for Open Access consumers in Rs./MW/month, except a few which
have determined in Paisa/unit.
 Transmission charges are towards the recovery of network related fixed costs and hence
should be specified linked to the transmission capacity.
 Transmission charges should be applied on the basis of applicable voltage level.
 Most of the Commissions have approved Transmission Charges for short term open
access as 25% of the Transmission Charges applicable for Long Term Open Access.
3.3.3 Approaches toward Transmission Charges and Transmission Loss

determination
Commissions have two alternatives for determining the transmission charges and
transmission losses these are:
1. Composite Transmission charge

2. Licensee Transmission charge
Composite Transmission charge:

Composite transmission charge is a solution towards avoiding the „pan-caking‟ of
licensee specific transmission charges. This approach treats all Open Access transactions the
State Transmission Utility (STU) on par irrespective of their injection and drawl point. The
approach also evades the need of constant reviewing and/or tracking of physical transactions.
Licensee Transmission charge:

Tariff determination is a licensee specific exercise and conclusively this approach
considers the Transmission charge also different for all the different operational licensees. This
approach concludes the Transmission charge for a particular transaction to depend upon the
extent of utilisation transmission capacity of various transmission licensees.
Page 19
3.4 WHEELING CHARGES AND DISTRIBUTION LOSSES
3.4.1 Introduction
i. Wheeling charges and loss compensation should be determined for each voltage level.
These charges help the distribution company to cover up the costs that it has incurred
for distribution of electricity. The key issue that discoms face is the non-segregation
of wire and supply business.
ii. In the absence of technical and commercial losses, technical losses based on sample
studies or estimated losses need to be specified. These losses are to be specified on
the basis of applicable voltage for delivery of power at 11kV or above. However, for
LT network, the losses at 11 kV may be considered.
3.4.2 Methodology for allocation of Wheeling charges
i. Wheeling charges can be allocated and subsequently can be collected once a proper
measure of network usage is determined for different users.
�� ℎ

�� ℎ
The above formula is used as a measure of network usage and further to allocate the cots.
ii. Different users connected at different voltage levels are charged with different
charges. The following table illustrates allocation of wheeling charges on the basis of
various voltage levels:
Voltage level Consumer base
33kV 33kV, 11kV and LT users
11kV 11kv and LT users
LT network Only by LT users
iii. Based on the allocation and considering the respective connected load/contract
demand at each voltage level, the wheeling charges in Rs./kVA/month can be worked
out or considering sales, wheeling charges in Rs. per Unit can be worked out.
3.4.3 Applicability of Transmission and Wheeling Charges
Transmission and wheeling charges depend upon the point of connection of the load and
the point of injection where the generator feeds the power generated into the grid. Various
scenarios are discussed as under and the applicability of transmission and wheeling charges is
analysed.
Page 20
Applicability of Point of Connection Applicable charges

Charges
Transmission Distribution Transmission Wheeling Charges
Network Network Charges
Scenario 1
Generator Yes
Yes Yes
Consumer Yes
Scenario 2
Generator Yes
Yes No
Consumer Yes
Scenario 3
Generator Yes
Yes No
Consumer Yes
Scenario 4
Generator Yes
No Yes
Consumer Yes
3.4.4 Case of Multiple Licensees
Network costs for each distribution licensees are different depending upon the various
network and cost characteristics. Therefore, wheeling charges need to be specified for each
distribution licensee based upon its network cost.
Page 21
3.5 OTHER CHARGES
Other Charges
Default Supply Balancing Market

charges Charges
3.5.1 Default Supply Charges
It is necessary to have the facility of default supply from the distribution licensee, in case
the Open Access generator/licensee is unable to supply power for some reason. The National
Tariff Policy has recommended that charges for such supply under these „default conditions‟
may be equated to the tariff for temporary supply. However, most of the states do not have
temporary supply charges for HT category consumers. Default supply charges shall be
applicable only for open access consumers availing power at distribution network.
3.5.2 Balancing Market Charges
Balancing and Settlement is an important and integral part for any competitive market.
The risk profile for any transaction is greatly affected by the B&S mechanism and hence the
viability of project is directly affected by this arrangement. Balancing charges should be
applicable for Open Access consumers availing power at Transmission network. However,
distribution Open Access consumers are not liable to pay these charges as the mechanism will be
applicable for the Distribution Licensee to which the Open Access consumer is connected.
Page 22
CHAPTER 4: OPEN ACCESS CHARGES IN MAHARASHTRA
4.1 Introduction
In this chapter, we will to calculate the charges which we have discussed in the previous
chapter with the Maharashtra perspective.
The Commission, in exercise of the powers vested in it under Section 61 and Section 62
of the Electricity Act, 2003 and all other powers enabling it in this behalf, and after taking into
consideration submissions made by various discoms, suggestions and objections of the public,
and responses of the discoms thereto, issues raised during the Public Hearing, and all other
relevant material, determines various charges to be levied upon the Open Access consumers in
the state.
4.2 Wheeling Charges
The Commission has determined the wheeling charges and wheeling losses for the use of
various Distribution Licensees while giving the Tariff order for FY 2012-13. Following cases
were referred while compiling the data:
1. Case No. 19 of 2012: APR Order for MSEDCL for the FY 2012-2013.
2. Case No. 98 of 2009 of APR Order for TPC-D for the FY 2012-2013.
3. Case No. 180 of 2011: APR Order for RInfra-D for the FY 2012-2013.
4.2.1 Wheeling Charges for MSEDCL
The Commission in its Order in Case 19 of 2012 (dated: 16/08/2012) has determined the
wheeling charges in Rs. /kWh and wheeling losses for the FY 2012-2013 for the use of
MSEDCL network. The same have been summarized in the table below.
Particulars Wheeling Losses Wheeling Charges Wheeling Charges

(Rs./kW/month) (Rs./kWh)
33 kV 6.00% 52.00 0.11
11/22 kV 9.00% 287.00 0.60
LT Level 12.50% 490.00 1.03
Table 1: Open Access charges: Wheeling charges and Wheeling Losses for MSEDCL
Page 23
4.2.2 Wheeling Charges for TPC-D
The Commission in its Order in Case 98 of 2009 (dated: 12/09/2010) has determined the
wheeling charges in Rs. /kWh and wheeling losses for the FY 2012-2013 for the use of TPC-D
network. The same have been summarized in the table below.
Particulars Wheeling Charges (Rs. /kWh) Wheeling Losses (%)
HT level 0.19 0.65
LT level 0.38 0.65
Table 2: Open Access charges: Wheeling charges and Wheeling Losses for TPC-D
4.2.3 Wheeling Charges and Wheeling Losses for RInfra-D
The Commission in its Order in Case No. 180 of 2011 (dated: 15/06/2012) has
determined the Wheeling Charges in Rs. /kWh and Wheeling losses for the use of RInfra-D for
the FY 2012-2013 and the same has been summarized in the table below.
Particulars Wheeling Charges (Rs. /kWh) Wheeling Losses (%)
HT level 0.46 1.5
LT level 0.88 9.0
Table 3: Open Access charges: Wheeling charges and Wheeling Losses for RInfra-D
4.3 Transmission Charges and Transmission Losses
4.3.1 Transmission Charges
The Commission has separated determined the Transmission Tariff for the use of
transmission system for the FY 2013-2014 to FY 2015-2016. Moreover, the Commission has
given the ruling that there will be no distinction in the transmission charges among long term
/medium term usage and short term usage except for denomination of such charges. The relevant
regulation in this regard, Regulation 66.2 of MERC (Multi Year Tariff) Regulations, 2011 is
reproduced as under:
“66.2 No distinction in charges shall exist in terms of long term, medium

term or short term access to the intra-State Transmission System:
Provided that, the transactions for long term and medium term shall be denominated
Page 24
in Rs/kW/month or any suitable denomination as may be stipulated by the

Commission, derived from transmission tariff for long term/medium term access as
specified in Regulation 64.3.”
The Commission in its order for Case No. 56 of 2013 has determined the InSTS charges. The
same have been summarized in the following table.
Particulars Units FY 2013 -14 FY 2014-15 FY 2015-16
TTSC (including past

period recovery of FY Rs. Cr 6819.97 6217.24 7220.28
2013-14)
Average Coincident Peak
MW 17748 19533 21102
Demand (CPD)
Transmission Tariff (Long

Rs./kW/month 320.22 265.25 285.13
term/Medium Term )
Transmission Tariff (Short
Term /collective/ Rs./kWh 0.43 0.36 0.38
renewable energy )
Table 4: Open Access charges: Transmission Charges
4.3.2 Transmission Losses
The intrastate transmission loss as recorded by MSLDC for FY 2012-13 is 4.19% which
is approved by the Commission for the FY 2013-2014 to FY 2015-2016. The Commission
approved the same in Order for Case No. 56 of 2013.
4.4 Cross Subsidy Surcharge
4.4.1 CSS for MSEDCL
MERC in the Order in Case No 138 of 2012 dated 21 February, 2013 decided Cross
Subsidy Surcharge to be levied on Open Access consumer.
Consumer Category CSS Computed CSS Approved

(Rs./Unit) (Rs./Unit)
Industry
Express Feeder 1.63 1.63
Page 25
Non Express Feeder 1.20 1.20

Seasonal Industry 2.84 2.84
Commercial
Express Feeder
Others 5.53 5.53
Non Express Feeder
Others 4.91 4.91
Railways 1.76 1.76
Public Water Works
Express Feeder (0.51) -
Non Express Feeder (0.33) -
Agriculture (2.95) -
Bulk Supply
Residential Complex (0.62) -
Commercial Complex (0.62) -
HT-IX Public services
Express feeders 3.29 3.29
Non-Express feeders 2.73 2.73
HT Consumers (33kV)
Industry
Commercial
Express Feeder
Others 5.09 5.09
Non Express Feeder
Others 4.47 4.47
Railways 1.32 1.32
Public Water Works
Bulk Supply
HT Consumers (22/11 kV)

Industry
Commercial
Express Feeder
Page 26
Others 4.43 4.43

Non Express Feeder
Others 3.81 3.81
Railways 0.66 0.66
Public Water Works
Bulk Supply
LT Consumers
Non Domestic
Up to 20 kW
0-200 Units (0.71) -
Above 200 units 3.11 3.11
'> 20 kW & < 50kW' 2.33 2.33
Above 50kW 4.84 4.84
Industrial
Below 20kW load (2.46) -
Above 20kW load 0.73 0.73
BPL (6.59) -
Domestic
0-100 Units (3.89) -
101-300 Units (1.23) -
301-500 Units 0.40 0.40
500 -1000Units 1.10 1.10
above 1000 units 1.10 1.10
Advertisements 15.58 15.58
Public Water Works (4.82) -
Street Lighting (3.11) -
Temporary Others
Other Purpose 7.79 7.79
Religious Purpose (3.75) -
LT Public services
0-200 Units (2.22) -
200-500 0.56 0.56
>500 units 0.56 0.56
>20-50 KW 1.67 1.67
>50 KW 2.18 2.18
Crematorium & Burial (LT-IX) (4.05) -
Table 5: Open Access charges: CSS for MSEDCL
Page 27
4.4.2 CSS for TPC-D
Consumer Category CSS Computed CSS Approved

Industry

Commercial
Express Feeder
Others 5.53 5.53
Non Express Feeder
Others 4.91 4.91
Railways 1.76 1.76
Public Water Works
Bulk Supply
HT Consumers (33kV)
Industry
Commercial
Express Feeder
Others 5.09 5.09
Non Express Feeder
Others 4.47 4.47
Railways 1.32 1.32
Public Water Works
Bulk Supply
Page 28
HT Consumers (22/11 kV)

Industry
Commercial
Express Feeder
Others 4.43 4.43
Non Express Feeder
Others 3.81 3.81
Railways 0.66 0.66
Public Water Works
Bulk Supply
LT Consumers
Non Domestic
Up to 20 kW
0-200 Units (0.71) -
Above 200 units 3.11 3.11
'> 20 kW & < 50kW' 2.33 2.33
Above 50kW 4.84 4.84
Industrial
Above 20kW load 0.73 0.73
BPL (6.59) -
Domestic
0-100 Units (3.89) -
101-300 Units (1.23) -
301-500 Units 0.40 0.40
500 -1000Units 1.10 1.10
above 1000 units 1.10 1.10
Public Water Works (4.82) -
Temporary Others
Other Purpose 7.79 7.79
Religious Purpose (3.75) -
Page 29
LT Public services
0-200 Units (2.22) -
200-500 0.56 0.56
>500 units 0.56 0.56
>20-50 KW 1.67 1.67
>50 KW 2.18 2.18
Crematorium & Burial (LT-IX) (4.05) -
Table 6: Open Access charges: CSS for TPC-D
4.4.3 CSS for RInfra-D
The issue pertaining to the computation of CSS is subject matter of pending appeals
before the Hon‟ble ATE in the batch of Appeal No. 132 of 2011; 133 of 2011; 139 of 2011; 140
of 2011; 178 of 2011 and others. Since, these are subjudice; no view therefore can be taken on
the said issues in the Case No.180 of 2011. Therefore, the Commission retains CSS at the
existing level as approved in Case 43 of 2010.
Computed CSS Applicable CSS

Consumer Category
Industry (1.33) -
Commercial 0.26 0.26
Group Housing (3.27) -
Temporary Supply 2.22 2.22
Industry (0.77) -
Commercial 0.83 0.83
Group Housing (2.71) -
Temporary Supply 2.79 2.79
Up to 20 kW (1.51) -
'> 20 kW & < 50kW' 0.84 0.84
Above 50kW 1.90 1.90
Industrial
Page 30
Above 20kW load (1.69) -
BPL (8.64) -
0-100 units (6.86) -
101-300 units (4.17) -
301- 500 units (1.24) -
500 and Above 0.03 0.03
0-100 units (6.98) -
101-300 units (3.65) -
301- 500 units (1.31) -
500 and Above (0.02) -
Temporary Religious (5.61) -
Temporary Others 5.51 5.51
Crematorium & Burial Grounds (5.59) -
Table 7: Open Access charges: CSS for RInfra-D
4.5 Viability of Intra-State Long Term Open Access
The following table illustrates the viability of Intra State Long Term Open Access from a
consumer perspective for a consumer procuring 5 MW power at 11 kV via Open Access vis-à-
vis discoms.
MSEDCL Tata Power RInfra
S.
Particulars Value Unit Value Unit Value Unit
No
1 Power Contracted through Open Access 5 MW 5 MW 5 MW
2 Load Factor 80 % 80% % 80 %
3 Power Factor 0.8 - 0.8 - 0.8 -
4 Energy Injected 2.88 MUs/ 2.88 MUs/ 2.88 MUs/
month month month
Page 31
5 Transmission Losses 4.85% % 4.85% % 4.85 %

6 Energy lost in Transmission 0.14 MUs/ 0.14 MUs/ 0.14 MUs/
month month month
7 Energy drawn at transmission end 2.74 MUs/ 2.74 MUs/ 2.74% MUs/
month month month
8 Wheeling losses 9.00% % 0.65 % 1.50% %
9 Energy lost in distribution 0.25 MUs/ 0.02 MUs/ 0.04 MUs/
month month month
10 Energy drawn at consumer end 2.49 MUs/ 2.72 MUs/ 2.7 MUs/
month month month
11 Renewable Purchase Obligation 8.00% % 8.00% % 8.00% %
12 Energy to be procured through 0.2 MUs/ 0.22 MUs/ 0.22 MUs/
renewable energy sources month month month
13 Base Tariff at which power is procured 4 INR/k 4 INR/k 4 INR/k
through Open Access Wh Wh Wh
14 Renewable Energy Tariff (assumed) 4.5 INR/k 4.5 INR/k 4.5 INR/k
Wh Wh Wh
15 Transmission charges (given) 213.39 INR/k 213.39 INR/k 213.39 INR/k
W/mo W/mo W/mo
nth nth nth
16 Wheeling charges (given) 0.6 INR/k 0.19 INR/k 0.46 INR/k
Wh Wh Wh
17 Cross Subsidy Surcharge (given) 0.31 INR/k 0 INR/k 0 INR/k
Wh Wh Wh
18 Additional surcharge (given) 0 INR/k 0 INR/k 0 INR/k
Wh Wh Wh
19 Amount paid to Open Access power 9.97 INR 10.89 INR 10.8 INR
supplier -conventional- (calculated) mn/mo mn/mo mn/mo
nth nth nth
20 Amount paid to Open Access power 0.9 INR 0.98 INR 0.97 INR
supplier -non conventional- (calculated) mn/mo mn/mo mn/mo
nth nth nth
21 Electricity charges to be paid by long 10.87 INR 11.87 INR 11.77 INR
term Open Access consumer mn/mo mn/mo mn/mo
nth nth nth
22 Total Transmission charges 1.07 INR 1.07 INR 1.07 INR
mn/mo mn/mo mn/mo
nth nth nth
23 Total Wheeling charges 1.64 INR 0.52 INR 1.26 INR
mn/mo mn/mo mn/mo
nth nth nth
24 Total CSS 0.77 INR 0 INR 0 INR
mn/mo mn/mo mn/mo
nth nth nth
25 Total Additional Surcharge INR 0 INR 0 INR
mn/mo mn/mo mn/mo
nth nth nth
26 Total Open Access Charges 3.48 INR 1.59 INR 2.33 INR
mn/mo mn/mo mn/mo
Page 32
nth nth nth

27 Total Charges paid by consumer 14.36 INR 13.46 INR 14.1 INR
availing long term Open Access mn/mo mn/mo mn/mo
(Calculated) nth nth nth
28 Effective Bulk Supply tariff (calculated) 4.04 INR/k 4.04 INR/k 4.04 INR/k
Wh Wh Wh
29 Effective Open Access Charges 1.29 INR/k 0.54 INR/k 0.8 INR/k
(Calculated) Wh Wh Wh
30 Effective Rate 5.33 INR/k 4.58 INR/k 4.84 INR/k
Wh Wh Wh
Table 8: Case 1: Power procurement via open access
MSEDCL Tata Power RInfra

S.
No. Particulars Value Units Value Unit Value Unit
1 Energy Charges 7.01 INR/kWh 5 INR/kWh 7.56 INR/kWh
2 Demand Charges 190 INR/kVA/ 150 INR/kVA/ 150 INR/kVA/
month month month
3 Any other charges 0 INR/kWh 0 INR/kWh 0 INR/kWh
4 Total Energy Charges 17.48 INR 13.61 INR 20.41 INR
mn/month mn/month mn/month
5 Total Demand Charges 1.19 INR 0.94 INR 0.94 INR
6 Other charges-Total 0 INR 0 INR 0 INR
7 Total charges paid 18.67 INR 14.55 INR 21.34 INR
8 Effective Rate 7.49 INR/kWh 5.34 INR/kWh 7.91 INR/kWh
Table 9: Case 2: Power Procurement via Discom
On careful analysis of the above two tables it can be concluded that from a consumer perspective
purchasing power via Open Access is very much viable and should in fact be preferred over
purchasing power from the distribution company prevailing in the area.
Page 33
CHAPTER 5: RENEWABLE ENERGY AND OPEN ACCESS
5.1 Introduction
Out of the present total installed electricity generation capacity of about 225GW 1, about
12 percent comes from renewable energy sources, notably, wind, biomass, small hydro and solar.
Renewable energy (RE) is being aggressively promoted in the country, with about 41 GW
scheduled to come up by FY-17. It has demonstrated rapid growth in all segments.
In order to transmit clean energy from the renewable energy plants to pan-country consumers,
the need for greater Open Access covering renewable power is bound to be acutely felt.
5.2 Need and Importance of Open Access in Renewable Energy
Renewable Energy sources are very unevenly distributed throughout the country. While
solar energy and wind energy can be efficiently harvested in the western and southern part of the
country, small hydro potential is concentrated in the north-east. Optimum utilisation of these
resources requires catering to consumer demand all over the country. To avail the benefits of a
country wide market, Open Access is a crucial tool in the hands of RE generators.
In order to give a boot to renewable energy based power generation, all the state
regulatory commissions brought out Renewable Purchase Obligation (RPO) for state distribution
companies and large consumers which mandate procurement of a specific percentage of the total
energy requirement from renewable sources. States are on a drive to develop renewable source
based power plants to fulfill these RPOs and Open Access helps them do that.
However, since many states are naturally deficient in RE sources, they fulfill their RPO‟s by
purchasing Renewable Energy Certificates and from RE generators in the states. These
generators, in turn, sell the power produced to other consumers at lower tariffs. Open Access,
thus aids in REC market development as well.
Large scale deployment of renewable energy plants brings economies of scale which, in turn,
reduces the cost of power from renewable sources. This enables costly renewable power from
wind, solar and other sources to gain grid parity with conventional energy faster. Thus, Open
Access aides in swift attainment of grid parity.
A multiplicity of renewable power producers, who participate in various market processes such
as competitive bidding, bilateral and collective power trading etc., work towards overall
1
as on 31.05.2013
Page 34
development of the Indian power market, in line with demand and supply dynamics. Provision of
easier Open Access to these developers, therefore is advantageous to the entire power market.
Wide deployment of RE
RPO fulfilment REC
market development
RE grid parity
Power market development
Figure 1: Advantages of Open Access in Renewable Energy
5.3 National Level Provision for Open Access in RE
5.3.1 Electricity Act, 2003
The Electricity Act, 2003 provides that co-generation and generation of electricity from
non-conventional sources should be promoted by SERC‟s through suitable measures for
connectivity with grid and sale of electricity to any person.
5.3.2 National Electricity Policy, 2005
The policy mentions promoting competition in renewable energy sector as one of the
objectives.
5.3.3 Rural Electrification Policy, 2006
The policy promotes Decentralized Distributed Generation (DDG) in off grid areas.
DDG, through non-conventional sources of energy, is promoted even where grid connectivity
exists.
Page 35
5.3.4 Rajiv Gandhi Grameen Vidyutikaran Yojana
Cost-effective DDG projects can be financed with 90 percent capital subsidy.
Only RE plants of capacity 50 MW or above are entitled to avail connectivity to the inter-state
transmission system. This is in contrast to the minimum capacity threshold of 250 MW for
conventional power plants2.
RE plants of lesser capacity (i.e. less than 50 MW) can also avail connectivity to the ISTS, but
they can do so collectively at a single point of connection. However, the aggregate capacity of
various plants at pooling substation has to be atleast 50 MW.
However, there are specific provisions in the Indian Electricity Grid Code (IEGC) which deal
with RE generation.
5.3.4 IEGC provisions
 The IEGC regulations mention “Facilitation of the development of renewable energy

sources by specifying the technical and commercial aspects for integration of these
resources into the grid”, as one of its prime objectives.
 It is further mentioned that, “In formulating perspective transmission plan the
transmission requirement for evacuating power from renewable energy sources shall also
be taken care of”.
 The code provides for treating renewable energy plants as „Must run‟ in order to
optimally utilize them.
 It gives the methodology for scheduling/rescheduling of wind and solar energy
(rescheduling on three hourly basis) and for compensating the wind and solar energy rich
states for dealing with the variable generation through Renewable Regulatory Charge.
 Wind farms with collective capacity of minimum of 10 MW, connected at 33 KV level or
above, are exempted from UI charges for deviations up to 30% from the scheduled
generation. For deviations within permissible limit, UI charges are borne by the host
state.
 Solar power developers are also exempted over deviations from schedule. The requisite
UI amount is borne by the state.
2
CERC Grant of connectivity, Long term and Medium-term Open Access in inter-state Transmission and related
matters (Amendment), 2005.
Page 36
5.3.5 Green corridor concept
Central and state electricity regulators envisage that by FY-17, the total installed RE
capacity would reach 66 GW. This capacity would be very unevenly distributed across states,
calling for huge demand of transmission infrastructure.
To meet the transmission needs of RE plants, augmentation and strengthening of the

existing transmission capacity is being planned. Power Grid Corporation has Rs. 42,000 crore
plans for setting up an exclusive countrywide green corridor for renewable energy transmission.
About Rs. 20,000 crore would be for intra-state strengthening and Rs. 22,000 crore for inter-state
transmission systems for grid integration. This would also include other work such as energy
storage, real time monitoring system and setting up of renewable energy management centre.
Under the green corridors concept, special focus would be given on system strengthening to deal
with operational challenges unique to RE power.
5.4 State level Open Access provisions
Most of the states have included special treatment to renewable energy in their intra-state
Open Access policies, in a bid to promote renewable power generation in their territories. Special
provisions with respect to transmission and wheeling charges, cross subsidy surcharge, etc, have
been provided in the respective state regulations favouring Renewable Energy, though there is
not much said on non-conventional energy in the state grid codes. Some of the provisions given
in the state regulations for intra-state Open Access are given below.
5.4.1 Transmission charges and Loss calculations
Several states have provided concessional transmission charges for Open Access users.
The states include, Chhattisgarh, Jharkhand, Tamil Nadu, Karnataka, Punjab and West Bengal.
5.4.2 Cross Subsidy Surcharge (CSS)
Many states have waived off cross-subsidy surcharge payable by Open Access users to
the state discoms. In general, two contrasting trends in CSS have been observed amongst states:
one in which CSS charges increase with increasing drawl voltage (such as in Bihar, Chhattisgarh,
Karnataka, and Odisha), and another in which CSS charges decrease with increase in the drawl
voltage (such as in Andhra Pradesh, Kerala and Meghalaya). The states that have favoured RE
power in respect of CSS are: Chhattisgarh, Delhi, Rajasthan, Tamil Nadu, Gujarat,
Maharashtra, Odisha and Tripura. Some other states such as Uttrakhand, Uttar Pradesh,
Jammu and Kashmir etc. have zero CSS.
Page 37
5.4.3 Wheeling Charges
Many states have offered concessional wheeling charges of RE power. Notable among
them include, West Bengal, Tamil Nadu, Punjab, Madhya Pradesh, Karnataka,
Jharkhand, Gujarat, Chhattisgarh and Andhra Pradesh.
5.4.5 Banking Provisions
States of Karnataka, Kerala, Madhya Pradesh, Maharashtra, Nagaland, Rajasthan,

Haryana, Tamil Nadu, Uttar Pradesh, and Uttrakhand provide facility for banking of energy
generated, for differing durations nevertheless.
Maharashtra provisions for promotion of OA in RE have been summarized in Figure 2 and

overall state comparison has been illustrated in Figure 3.
Application Fee Transmission Open Access-INR 10,000
Transmission charges Renewable- 0.29 INR/kWh

and losses Transmission Loss: 4.24 percent
25% of the applicable CSS for OA consumer

Cross Subsidy Surcharge purchasing power from renewable sources of
energy
LT network: MSEDCL INR 0.36/kWh; TPC

Wheeling charges INR 0.38 /kWh; RInfra INR0.88 /kWh
Banking available for self use and third party

Banking Provisions wheeling for period of 1 year.
Figure 2: Maharashtra State provisions for promotion of Open Access in RE
Page 38
Solar projects exepmted from wheeling and transmission charges.

Unutilized wind energy fed to the grid paid for at 85% of the tariff by
discom.
Transmission and wheeling charges equal to 6% of the wheeling charges

Cross Subsidy Surcharge is 50% of the conventional Cross Subsidy
Surcharge
No CSS for solar, Wind projects (without REC)
CSS applicable for wind projects for obtaining REC
For small wind generators, transmission and wheeling loss equal to 7%
No wheeling charges for solar
2% banking charges for wind and small hydro. No banking charges for
solar.
Banking facility available for plants with infirm generation (not allowed
in case of third party sale).
Wheeling charges equal to 2% of the energy injected

Towards wheeling charges in terms of units.
100% banking allowed
CSS equals to 25% of conventional CSS
1 year Banking facility available for self use and third party
wheeling
Transmission and wheeling charges equal to 2% of the energy injected.
10% of the ARR by D/L from such additional injection shall be passed
on to the STU for compensating on the account of transmission losses.
No cross-subsidy surcharge
6 month banking facility for infirm generation
Transmission and wheeling charges equal to 40% of conventional charges for wind,
50% for biomass
CSS equal to 50% of conventional charges for wind power projects
1 year banking facility available
Transmission charges equal to two-third of conventional charges
Wheeling charges equal to one of (A) 1/3 of conventional charges or (B) Cost
of 7.5 of energy injected, whichever is higher.
Figure 3: State level Open Access provisions for Renewable Energy
Page 39
CHAPTER 6: IMPEDIMENTS IN IMPLEMENATATION OF OPEN ACCESS
6.1 Discom perspective
6.1.1 Revenue Loss

Open Access has enabled the heavy and bulk consumers to discontinue
their contract with the distribution companies operational in their areas. This has not only
reduced the quantum of energy supplied by the company but has also dented on the revenue
collection. Collection efficiency in this segment has been observed to be around 95-100%
contrary to very less values of the agricultural and domestic consumers.
6.1.2 Forced Universal Service Obligation

Open Access consumers usually have firm sources of power, however in
case of a fault; the licensee under the Universal Service Obligation has to supply power to the
consumer. Thus, the distribution companies are not able to schedule their loads which further
leads to load shedding and instability of the grid.
6.1.3 Determination of Cross Subsidy Surcharge for Open Access consumers

Majority of the distribution companies in our country are government
agencies and are “State” within the definition of Article 12 of the Constitution of India. In
accordance to Article 14, therefore, they cannot discriminate between two similarly placed
consumers. Therefore, determination of CSS becomes an intricate and delicate issue.
6.1.4 Capacity building at SLDC

SLDC needs to have the necessary technology, expertise, manpower
to handle such large number of Open Access approval requests. (Source: Case 50 of 2012,
MERC)
6.1.5 Ring fencing of SLDC

SLDC would have to be independent while executing its authority of
scheduling Open Access requests. (Source: Case 50 of 2012, MERC)
6.1.6 Shifting burden on Low end consumers

The LT consumers have to bear the burden of the increased tariff so as to
compensate for the discontinued Open Access consumers.
6.1.7 Partial Open Access

The consumer who opts for partial Open Access tends to opt for Discom
supplied power during peak hours at the regulated tariff and during off peak hours they tend to
fulfill their base load demand through Open Access. As a result local the Discom has to procure
most expensive power which in terns leads to increase their power purchase cost, raises the
Page 40
overall tariff and in the end the burden of the increased tariff shifts to the non Open Access
consumers.
6.2 Regulatory and Legal perspective
6.2.1 Regulatory Balance

Regulatory Commissions have a tough job at hand while balancing the Open
Access charges. The policies need to make sure that the charges are not so high that nobody
avails the open access and the sole intention of competition with which it as introduced in the
Act and not so low that the low end consumers have to pay a very high tariff so as to compensate
for the loss incurred by the discoms in case many industries switch over to the Open Access
regime.
6.2.2 Deregulation of Industrial Tariff

The MoP letter and by the directions of Ministry of Law and Justice, it is clearly
evident to deregulate the tariff for consumers having demand of 1 MW or above as these are
deemed open access consumers. However, the move will have both Pros and Cons associated
with it. These are numerated as below:
Advantages
i. Removal of Cross Subsidy: The move will help the bulk consumers as they no longer
will be liable to pay CSS for SERCs would not determine their tariff.
ii. Additional Transmission and Wheeling Charges: Transmission and Wheeling
Charges will prove to be sources of extra income to the Discoms other than usual
income earned by distributing power to consumers having capacity less than 1 MW.
iii. Lower Average Revenue Requirement: Since the quantum of purchased power will
reduce for the various discoms, the move will result in lower ARR.
Disadvantages
i. Low availability of power to bulk consumers: The generators are already serving long
term PPAs with the various state utilities, the bulk consumers would find it difficult
to procure power for consumption.
ii. Surge in Short term power market rate: Bulk consumers when devoid of PPAs with
generators will have to resort to short term power procurement through various
exchanges and similar instrument. The direct impact of such a step will be a steep
increase in the short term power rate.
iii. Less preparedness of SLDCs and RLDCs: On ground zero basis, on critical
assessment of our various Load Despatch Centres, it is evident that at this point of
time; these centres are not adequately equipped for such a move.
Page 41
6.3 Consumer perspective
6.3.1 Irrational Temporary Tariff

The consumer is always overcharged due to the UI and ABT mechanism.
Consider an example when an industrial consumer has filed for a contract demand of 10 MW
from Open Access, considering his load fluctuations are 8 MW to 10 MW. The power scheduled
from the regional grid is 10 MW; however the load only goes up to 8 MW. The Licensee will
have an under drawl of 2 MW and will get a credit for it under the State Balancing and
Settlement Scheme and under Clause 28.2.2 of the MERC DOA regulations the Consumer will
not get any credit and will continue to pay for 10MW to the generator and entire credit for 2 MW
at a substantial rate –UI or SMP will be retained by the Licensee.
Consider the case of over drawl; say for example, the industry load has gone up to
12 MW. The industry will have to pay a hefty amount as per clause 28.2.1 and the rate would be
highest of:
i. The regional UI rate with congestion charges

ii. The SPM rate of intra-state ABT
iii. Temporary tariff
This rate is much higher than what the state has to pay to the State Settlement account and what
the state has to pay to the regional UI account.
6.3.2 Power Purchase

In the absence of long term surplus power many Open Access consumers have to
source power through short term contracts which may be expensive power surrendered by the
distribution licensees. Expensive power coupled with Transmission charges & losses, Wheeling
Charges & losses, Cross subsidy surcharge, standby charges, additional surcharge and other
charges may be the death knell for medium sized industrial & commercial consumers.
6.3.3 Eligibility Criteria

Presently, consumers having a demand of 1 MW or above are eligible to
avail Open Access. However, the move is inhibitive for all the other consumers who wish to pay
the open access charges but yet have no choice but to avail power from the local Discom.
6.3.4 Operational Issues

There are many operational issues faced by the consumers who opt for
Open Access such as day ahead scheduling, real time dispatch, carrying of weekly MRI,
preparation of UI account and monthly account etc. There is less competence of RLDC/SLDC in
facilitating various aforementioned processes.
Page 42
6.3.5 Wheeling Capacity

For the purpose of Open Access only spare capacity by inherent
design margin and variation in power flow is available for Open Access. This does not assure
Open Access consumer for continuous supply. (Source: Case 50 of 2012, MERC)
6.3.6 Segregation of Wires and Supply cost

Cost for wire business and power supply business should be properly
segregated so as to arrive at a consistent wheeling charge. Wheeling losses should also
be limited to technical losses and must exclude commercial losses as most of the bulk
consumers are connected at 11 kV and above, whereas most of the commercial losses occur at
below 11 kV level. (Source: Case 50 of 2012, MERC)
6.3.7 Availability of spinning reserve/Non bonded power

There should be availability of power which has not been committed for
long term PPA or some peaking Power Plants as a Spinning Reserve. Since most of the
generators have tied up their power on long term basis with the Distribution Companies, a
very limited capacity is available for merchant transactions. If availability of non bonded
power does not materialize it would completely distort demand supply equation in favor of
power producer and will put undue pressure on Open Access consumers. If Discoms are not
obligated to supply power to bulk consumers, they will have huge amount of excess capacity and
thus will monopolies the market as major sellers of power. (Source: Case 50 of 2012, MERC)
6.3.8 Assurance of Supply

The OA consumers are only assured of the supply in case of the separate
feeder lines only, in other cases until they do firm agreement with generator they will have to
pay the temporary tariff for drawing power from licensee, which is very high in case the
generator fails to inject power in the grid. These days there are mainly meshed network along
with embedded consumers (non-Open Access consumers). In the event of load shedding by
distribution licensee for a feeder where both Open Access consumers and embedded
consumers (non-Open Access consumers) are connected, Open Access will be rendered in
fructuous.
6.3.9 Limit on the demand

The consumer can only avail open access to the extent of its contracted
demand with the Discom.
6.3.10 High Cross Subsidy Surcharge

Progressively the Cross Subsidy Surcharge is to be reduced, as mentioned
in the EA, 2003. However, most of the states are NOT reducing the CSS.
Page 43
6.3.11 Congestion in the Transmission Link

This happens due to the non availability of Transmission Capability. In
recent months, due to less Available Transfer Capability (ATC), some of the STOA buyers faced
congestion especially while importing power from Southern Region generators.
6.3.12 Reduction in Contract Demand

In the clause of the reduction of contract demand in Clause 4.2.1 of the
Draft Distribution OA Regulation in Maharashtra, the industry recurring power from the Power
Exchanges has to commit in writing to withdraw power uniformly throughout the day, which can
be a little difficult so it can be replaced by uniformity during the whole NOC period.
Clarification regarding the Minimum demand charges be levied on the remaining contract
demand or the entire contact demand has to be clearly indicated within the regulation. Clarity
should be there that whether the levied demand charges will be on the remaining contract
demand, after reduction for the Open Access quantum.
6.3.13 Stand-by-charges for drawl of power by Open Access consumer from the grid
In case of Planned Shutdown by the Supplier, the Demand Charges & the
tariff shall be billed as per the prevailing Open Access Consumer category if it is conveyed to the
Discom prior. In case of Unplanned Shutdown, the Standby supply shall be provided to the Open
Access Consumers against payment of temporary tariff as determined by the Commission as
high as Rs.12/kWh.
Page 44
CHAPTER 7: FINANCIAL MODELING (1MW BAGASSE PLANT)
7.1 Introduction
Renewable power generation capacity in India has been set up largely through private sector
investments. New investment is the most potent indicator of growth of the sector. As per an
estimate, in 2009 the total financial investment in clean energy in India was at INR 135 billion.
India ranked the fourth most attractive country for renewable energy investment in the world,
only behind the United States, China, and Germany. 3 But highly aggressive bidding by
developers in increasing fierce competitive environment and uncertainty regarding the various
costs incurred; increases the risk associated with making an investment in setting up solar power
plant.
A financial model helps the developer to explore in detail the financial benefits and costs
associated with the investment. This facilitates the identification of key variables affecting the
project value and enables financing decisions. The following section describe the key items and
assumptions that are included in the financial modeling of a typical co-generation bagasse based
power plant, and discusses the conclusions based on the calculation of various financial
parameters.
7.2 Renewable energy scenario in India

In the present context of climate change, energy security and sustainable development the
importance of Renewable energy cannot be overstated. The vast Indian landscape has been
endowed with a large amount of renewable energy potential of which, so far, we have been able
to tap only a small percentage. The first major step in the direction of developing renewable
sources was an offshoot of the two oil shocks of the 1970s, which raised serious concerns about
the energy security and self- sufficiency of India. This led the search for alternative sources of
fuel supply and hence the Committee on additional Sources of Energy (CASE) was constituted
under the Department of Science and Technology, in 1981. In 1982, the Department of Non-
Conventional Sources of Energy, which incorporated the CASE, was created under the Ministry
of Energy. Later in 1992, a separate ministry, the Ministry of Non Conventional Energy Sources,
was created which gave major fillip to the Indian renewable energy sector. In 2006, the MNES
was renamed the Ministry of New and Renewable Energy Sources and the MNRE in its present
form was thus born. The renewable energy potential is being revised upwards after each
assessment as new sites are being identified and added constantly. The total grid interactive
renewable power in India is 39,623.40 MW 4 . Clearly, there is large scope for developing
renewable energy in India. A look at the regulatory aspects reveals that various enabling
provisions have been provided in the Electricity Act 2003, National Electricity Policy and
National Tariff Policy to develop the renewable energy sector in India.
3
“All Renewables Index” for Feb 2012 – ERNST & YOUNG
4
As on 30.03.2013; Source: CEA monthly report
Page 45
The National Action Plan on Climate Change (NAPCC), which outlines a national
strategy to enable the country to adapt to climate change, had suggested to start with a 5% of
RPO( 2009-10) and then increase it by 1% yearly for 10 years.
7.3 Renewable Energy Support Framework
Globally, different countries have used different policy instruments to promote renewable
based on their various stages of development. The number of countries with renewable policies
or support mechanisms have more than doubled between 2005 and early 2011, from 55 to 118.
The major regulatory policies and support incentives in place in many of the countries are given
below:
 Feed-in-tariffs
 Renewable Portfolio Standards (RPS)
 Net Metering
 Tradable RECs
 Bio fuels obligation
 Capital subsidy, grant, or rebate
 Investment Tax credits
 Production Tax Credits
 Production payments
A combination of the above policies rather than a single policy alone has resulted in success
stories in many countries. Nevertheless, feed-in-tariff has been regarded the most successful
among them. Various studies conducted by IEA, EU, and other multilateral organizations have
revealed that “well-adapted feed-in tariff regimes are generally the most efficient and effective
support schemes for promoting renewable electricity”.
Feed-in-tariff generally involves a minimum guaranteed price or a premium over the

prevailing market prices, as approved by the regulator for a specific number of years. However,
it need not have any direct relation to the cost of generation. The tariffs generally include a
digressive price element to allow for technological advancements and subsequent cost
reductions.
Renewable Portfolio Standards or Renewable Purchase Obligation involves fixing a

minimum percentage of renewable energy to be purchased by the utilities which is to be
increased gradually. While feed-in-tariffs the capacity is market determined, in RPS the price is
Page 46
market determined. RPS makes a good promotion instrument along with the Tradable certificates
such as the Renewable Energy Certificates, as these certificates apart from helping the utilities
realize their quotas also help to ensure that generation units come up in the most suitable
location. Other fiscal incentives help in reducing the perceived risks and thus attract more
investment in renewables. India has also adopted various international practices and adapted to
suit Indian context. The preferential tariff in India is a kind of feed-in-tariff mechanism. The
RPOs and the RECs are also in line with the international practices.
7.4 Renewable energy scenario in Maharashtra
The total installed capacity of Maharashtra as on 31.03.2013 is 28310.83 MW out of

which energy from Renewable Energy Sources (RES) is 4536.3 MW. Hence, RES make a
contribution of 13.89% of the total installed capacity. Source wise renewable energy contribution
as on 31.03.2013 is summarized in Table 2.
Cumulative
S. No Sources Potential (MW)
achievements (MW)
1 Wind Power 5439 3005.6
2 Bagasse Cogeneration 1250 1033.9
3 Biomass 781 170
4 Small Hydro Power 732.63 278.6
5 Waste to energy 637 8.7
6 Solar Power 4-7 kWh/m2/day 39.5
Total 8839.63 4536.3
Table 10: Renewable Energy Potential in India
It can be clearly observed from the break-up that Bagasse Cogeneration contributes a significant
22.79% to the total renewable capacity of Maharashtra.
7.5 Bagasse
Bagasse is the fibrous residue left over after milling of the sugarcane. Bagasse contains
mainly cellulose, hemi cellulose, pentosans, lignin, Sugars, wax, and minerals. The quantity of
bagasse obtained varies from 22 to 36% on Cane and is mainly due to the fibre portion in Cane
and the cleanliness of Cane supplied, which, depends on harvesting practices.
7.6 Bagasse as fuel
Bagasse is combusted in furnaces to produce steam for power generation. The value of
Bagasse as a fuel depends largely on its calorific value, which in turn is affected by its
Page 47
composition, especially with respect to its water content and to the calorific value of the
Sugarcane crop, which depends mainly on its sucrose content. Moisture contents is the main
determinant of calorific value i.e. the lower the moisture content, the higher the calorific value. A
good milling process will result in low moisture of 45% whereas 52% moisture would indicate
poor milling efficiency. Most mills produce Bagasse of 48% moisture content, and most boilers
are designed to burn Bagasse at around 50% moisture. Bagasse also contains approximately
equal proportion of fibre (cellulose), the components of which are carbon, hydrogen and oxygen,
some sucrose (1-2 %), and ash originating from extraneous matter.
7.7 Cogeneration in sugar mills using Bagasse as fuel
For every 100 tons of Sugarcane crushed, a Sugar factory produces nearly 30 tons of wet
Bagasse. It is often used as a primary fuel source for Sugar mills; when burned in a large
quantity, it produces sufficient heat and electrical energy to supply all the needs of a typical
Sugar mill, with energy to spare. Cogeneration of Bagasse is one of the most attractive and
successful energy projects that have already been demonstrated in many Sugarcane producing
countries such as Mauritius, Reunion Island, India and Brazil.
7.8 Bagasse cogeneration potential in India
A task force appointed by the Ministry in 1993, estimated that if all the sugar mills were
to adopt technically and economically optimum levels of cogeneration for extracting power from
the bagasse production by them, an additional 3500 MW. Based on the present capacity of sugar
mills, higher pressure/ temperature configuration the potential has been revalidated to 5000 MW
of surplus power.
The state-wise potential for Bagasse based cogeneration is displayed in Chart 1 and Table 1.
MNRE had set a target of 350 MW capacity addition in the face of Bagasse Cogeneration; the
total deployment in 2012-13 over achieved the target and achieved a capacity addition of 352.20
MW taking the cumulative achievement up to 31.03.2013 to 2337.43 MW.
Page 48
State-wise Bagasse based cogen potential

1400
1200
1000
800
Potential (MW) 600
400
200
0
States
Chart 1: Renewable energy potential state wise
(Source: MNRE Annual Report)
S. No State Potential (MW)
1 Maharashtra 1250
2 Uttar Pradesh 1250
3 Tamil Nadu 500
4 Karnataka 400
5 Andhra Pradesh 300
6 Bihar 250
7 Gujarat 400
8 Punjab 250
9 Haryana & Others 400
Total 5000
Table 11: State wise renewable energy potential in India
(Source: MNRE Annual Report)
Page 49
7.9 Bagasse cogeneration scenario in Maharashtra
The promotion of Bagasse co-generation in sugar mills for surplus power generation is
one of the important schemes of Maharashtra Energy Development Agency. There are nearly
202 sugar factories registered in Maharashtra.
Type of Cogeneration Bagasse project

S No. No. of Units Capacity (MW)
commissioned in Maharashtra
1 Co-operative Sugar mills 33 480
2 Private sugar mills 10 191.5
Total 43 671.5
Table 12: Bagasse cogeneration in Maharashtra
7.10 Bagasse Cogeneration- A Technical Overview
Bagasse cogeneration was pioneered in Mauritius and Hawaii. By 1926-27, 26% of

Mauritius‟ and 10% of Hawaii‟s electricity generation was from sugar factories. The process of
bagasse cogeneration is sketched out in Figure, below
Figure 4: The Bagasse cogeneration process
The new generation of high-efficiency boilers being installed on grid-connected bagasse

cogeneration plants, produce extra-high pressures and temperatures rated at respectively 60-80
kg/cm2 and 490-520°C and above, compared to current settings of around 20 kg/cm2 and 300°C.
The rationale for using such boilers is summarized in Table below.
Page 50
Particulars Low T and P High T and P
Power Generation (kWh/TC) 20-30 90-160
Net Power from Bagasse (kWh per tonne) 60 370-510
Heat rate (kcal/kWh) 21,000 6000-8000
Table 13: Comparison of Low- with High-Temperature and -Pressure Boilers
In order to maximize the amount of electricity sold to the grid, it is also important to minimize
the process use of steam and power through the use of energy conservation techniques and
management as well as energy efficient equipment. In India, such policies have included
conversion of mills from steam-driven to electricity-driven, use of steam-saving equipment in
boiler houses and energy-efficient pumps and motors.
Bagasse cogeneration, especially in high-temperature and pressure configurations, could play an

important role in encouraging much more efficient use of resources and ensuring widespread
access to electricity services. Unfortunately, insufficient incentive to supply electricity to the grid
because of low or inexistent buyback rates has meant that, until recently, around two thirds of
harvested bagasse was wasted. This situation is now set to improve, with the introduction of
more effective biomass feed-in tariffs in countries such as Brazil and India.
7.11 Tariff determination for Bagasse cogeneration plant in Maharashtra
The Commission issues a Suo-Motu order every year, each year of the control period for
determination of generic tariff for power procured from various sources of energy. The tariff
determined is under Regulation 8 of the Maharashtra Electricity Regulatory Commission (Terms
and Conditions for Determination of Renewable Energy Tariff) Regulations, 2010.
The subsequent section discusses about the various assumptions made for the purpose of
determination of tariff, as allowed in the Regulations.
7.12 Assumptions for Tariff determination
7.12.1 Capital costs
The normative capital cost for setting up 1 MW Non-fossil fuel based Cogeneration
Projects shall be INR 398.07 Lakh/MW for FY 2010-11 as per MERC (Terms and Conditions
for determination of RE tariff) Regulations, 2010. The indexed Capital Cost for fourth year of
the control period (i.e. FY 2013-14) has been notified as INR 466.08 lakh/MW.
Page 51
7.12.2 Power Generation
7.12.2.1 Plant Load Factor
For the purpose of determining fixed charge, the plant load factor for non-fossil fuel
based co-generation projects shall be computed on the basis of plant availability for number of
operating days considering operations during crushing season and off-season specified as under
and load factor of 60%.
The number of operating days shall be as follows:-
Operating days Plant load factor (%)
180 days (crushing) + 60 days (off-season)= 240 days operating days 60%
Table 14: Operating days for a cogeneration plant
7.12.2.2 Useful life
The useful life of the co-generation project has been assumed to be 20 years for the
purpose of tariff calculations.
7.12.3 Financial Assumptions
The project financing structure generally comprises of debt and equity. The general
financial assumptions for a project in India are as follows:
• Financing structure – equity 30% and debt 70% as assumed in MERC tariff order.
• Debt repayment period – 10 years
The following table shows assumptions taken for calculation in financial model:
Financial
Assumptions
Debt-Equity
Debt % 70%
Equity % 30%
Total debt component Rs. Lakh 326.26
Total Equity component Rs. Lakh 139.82
Debt
Loan Amount Rs. Lakh 326.26
Repayment period Years 10
Interest rate % 12.87%
Equity
Page 52
Total equity amount Rs. Lakh 139.82

Return on equity for first 10 years % 19%
RoE period Years 10
Return on equity after 10 years % p.a 24%
Weighted average of RoE % p.a 22%
Discount rate % p.a 15.61%
WACC Weighted Average Cost of Capital % p.a 15.60%
Table 15: Financial Assumptions
Financial
Assumptions
(Tax Related)
Fiscal Assumptions Income tax % 32.45
MAT rate(for first 10 years) % 20.08
Depreciation
Depreciation Rate (first 10
years) % p.a 7%
Depreciation rate 11th year
onwards % p.a 2%
Table 16: Tax related Financial Assumptions
Working capital
For Fixed charges
O&M charges months 1
Maintenance spares (% of O&M expenses) 15%
Receivables for debtors months 2
For Variable charges
Biomass stock months 4
Interest on working capital % 13.37%
Table 17: Working Capital Assumptions
Fuel related assumptions

Heat rate
after stabilization kcal/kWh 3600
Biomass Base price- Bagasse for FY 2013-2014 Rs./T 1980

GCV- Bagasse kcal/kg 3611
Table 18: Fuel related assumptions
Page 53
Operation & Maintenance Expenses

Power Plant (FY 2013-14) Rs. Lakh 16.67
Escalation % 5.72%
Table 19: Operations and Maintenance assumptions
7.13 Project Economics and Financial Indicators
Project financial model calculates a range of project value indicators in order to allow
developers, lenders, investors and relevant government bodies to assess the project economics
from several perspectives.
From an investor‟s point of view, a project is generally considered to be a reasonable investment
only if the internal rate of return (IRR) is higher than the weighted average cost of capital
(WACC). Investors will have access to capital at a range of costs; the return arising from
investment of that capital must be sufficient to meet the costs of that capital. Moreover, the
investment should generate a premium associated with the perceived risk levels of the project.
Co-generation projects are usually financed with equity and debt components. As a result, the
IRR for the equity component can be calculated separately from the IRR for the project as a
whole. The developer‟s decision to implement the project or not, will be based on the equity
IRR.
As returns generated in the future are worth less than returns generated today, a discount can be
applied to future cash flows to present them at their present value. The sum of discounted future
cash flows is termed the net present value (NPV). Investors will seek a positive NPV, assessed
using a discount rate that reflects the WACC and perceived risk levels of the project.
Lenders will be primarily concerned with the ability of the project to meet debt service
requirements. This can be measured by means of the debt service coverage ratio (DSCR), which
is the cash flow available to service debt divided by the debt service requirements. The Average
DSCR represents the average debt serviceability of the project over the debt term. A higher
DSCR results in a higher capacity of the project to service the debt. Minimum DSCR represents
the minimum repayment ability of the project over the debt term. A Minimum DSCR value of
less than one indicates the project is unable to service the debt in at least one year.
Based on assumptions taken and calculations done in financial model following are values of
various financial indicators.
Project Economics
Project IRR 17.57%
Equity IRR 15.35%
Minimum DSCR 1.30
Average DSCR 1.67
Table 20: Project Economics of a bagasse power plant
Page 54
7.14 Sensitivity Analysis
Sensitivity analysis involves changing the inputs in the financial model (such as power
tariff, capital cost, interest rate etc.) to analyze how the value of the project changes (measured
using Net Present Value, Internal Rate of Return, or the Debt Service Cover Ratio). Sensitivity
analysis gives lenders and investors a greater understanding of the effects of changes in inputs on
the project‟s profitability and bankability. It helps them understand the key risks associated with
the project. Lenders will conduct sensitivity analysis around the key variables in order to
determine whether the project will be able to service the debt in a bad year, for example if energy
yield is lower than expected, or operational expenditure is higher than expected.
Following sensitivity analysis was done:
7.14.1 Sensitivity Analysis of Capital mix:
The debt to equity ratio has been specified as 70:30 by the regulation issued by
Maharashtra Electricity Regulatory Commission for determination of renewable tariff however;
an analysis would be helpful in understanding the effect on levelised tariff with any modification
in this ratio.
Ratio Tariff
Project
(Rs/ WACC
Equity IRR
Debt kWh)
(%)
(%)
100 0 5.34 12.87% 13.1%
80 20 5.66 14.7% 16.4%
70 30 5.81 15.6% 17.7%
50 50 6.11 17.44% 20.3%
30 70 6.39 19.26% 22.5%
20 80 6.51 20.17% 23.6%
0 100 6.78 22.00% 25.6%
Table 21: Debt Equity ratio v/s Levelised Tariff v/s Project IRR
Page 55
100 100 100 100

Impact of Capital mix on Tariff
90 80 90
80 70 80
Equity Percentage
70 80 70
Debt Percentage
60 50 70 60
50 50
40 50 30 40
30 20 30
20 30 20
20 5.81
10 10
0 0
5.34 5.66 5.81 6.11 6.39 6.52 6.78
Tariff
Chart 2: Impact of Capital Mix on Tariff
7.14.2 Sensitivity Analysis of Plant Load Factor:
Plant Load Factor for a non-fossil fuel based co-generation plant depends largely upon
the availability of fuel and the consumption of the electricity produced. Following analysis
shows the impact of a comparative reduction and increment in the Plant Load Factor.
Plant Load Factor Levelised Tariff (Rs. Per kWh)
40% 6.68
50% 6.16
60% 5.81
70% 5.57
80% 5.38
90% 5.23
100% 5.12
Table 22: Plant Load Factor v/s Levelised Tariff
Page 56
Impact of Plant Load Factor on Tariff
6.68
Levelised Traiff (Rs per kWh)
6.80
6.50
6.16
6.20
5.81
5.90
5.57
5.60 5.38
5.23
5.30 5.12
5.00
40 50 60 70 80 90 100
Plant Load Factor (%)
Chart 3: Impact of PLF on Tariff
7.14.3 Sensitivity Analysis of Plant Capital Cost:
The Capital cost of a plan can be reduced to a maximum of 10% of the cost mentioned in
the regulations if good planning is deployed. The converse also stands true and a generator may
incur more cost to an extent of 10% if the planning and erection of the plant is not done in a
professional and stipulated manner. This 10% increase or decrease in plant capital cost affects
the levelised cost of generation incurred to the plant owner. This may further lead to a loss or
profit to the power producer.
Project Capital Cost (Rs. Lakh/MW) Tariff (Rs. Per kWh)
Approved 466.08 5.81
10% less 419.47 5.62
10% more 512.69 5.96
Table 23: Project capital cost v/s Tariff
Page 57
Impact of project cost on tariff

6
Levelised Tarfiff 5.9 5.96

(Rs. per kWh)
5.8
5.81
5.7
5.6
5.62
5.5
466.08 419.472 512.688
Total Project Cost (Rs. Lakh/MW)
Chart 4: Impact of project cost on Tariff
7.14.4 Sensitivity analysis of Fuel Price variation
Fuel costs account for majority of the variable cost component in the final determination
of cost of generation in a non-fossil fuel based cogeneration plants. Fuel price variation has been
observed to vary from -20% to 50% of the approved fuel price in the Order and regulations.
Fuel Price variation

Levelised Tariff (Rs. Per kWh)
Percentage of Amount
approved cost (Rs. Per Tonne)
-20% 1584 5.08
-10% 1782 5.45
0 1980 5.81
10% 2178 6.19
20% 2376 6.55
30% 2574 6.92
40% 2772 7.30
50% 2970 7.66
Table 24: Fuel Price Variation v/s Levelised Tariff
Page 58
Impact of Fuel Prive Variation on Tariff

8 7.66
Levelised Tariff (Rs./kWh)

7.75
7.5 7.3
7.25 6.92
7
6.75 6.55
6.5 6.19
6.25
6 5.81
5.75 5.45
5.5
5.08
5.25
5
1584 1782 1980 2178 2376 2574 2772 2970
Fuel Price (Rs. Per Tonne)
Chart 5: Impact of Fuel price variation on Tariff
Page 59
CHAPTER 8: CONCLUSIONS AND RECOMMENDATIONS
8.1 Open Access: Conclusions and Recommendations
8.1.1 Conclusions
Open Access has been widely recognized as the soul of the Electricity Act. This is so because
open access is the mechanism crafted to usher in competition and choice, and in turn facilitate
investments and protect interests of the consumers.
Several power stations have obtained long term open access and there are virtually no issues in this
regard because transmission utilities can undertake network augmentation to accommodate long term
open access requests and the applicant is required to take commitment for payment of transmission
charges. However, probably no consumer has obtained long term open access so far. Medium term
open access was introduced by the CERC in January 2010, but the product is still yet to be used.
Short term open access has been in vogue for the last eight years.
A major conclusion can be drawn from the viability study of Long term Open Access which has
been done in Chapter 4. The landed cost for an Open Access consumer is in the range of Rs.
4.58/unit to Rs. 5.33/unit contrary to a much higher cost of Rs. 5.34/ unit to Rs. 7.49/ unit. This
is a clear indicator about the profitability to an Open Access consumer if he opts for the
mechanism. However, lack of infrastructure and other impediments, the growth is stagnated for
this mechanism to flourish and bring about relevant and much needed competition in the power
sector.
8.1.2 Recommendations
Deemed Open Access: The Regulatory Commissions should implement the concept of
deemed open access approvals for the consumers for specific timelines in case of
abnormal delay in grant of necessary permissions by Load Dispatch Centres and/or
distribution companies.
UI implementation: To overcome the issue of absurd temporary charges, UI can be
implemented on intra-state basis.
Helping hand from the Central Regulator: CERC should extend a helping hand to the
state regulators for timely implementation of Open Access across the country.
Bilateral Scheduling: Buyer sends drawl schedule for power contracted from third party
to SLDC/RLDC /NLDC on day-ahead/advanced/FCFS basis etc. Buyer has to adhere to
the sanctioned schedule during actual transaction .If any deviation is observed in actual
drawl it shall be settled through UI mechanism.
Partial Open Access should not be allowed.
Page 60
Installation of separate meters: If a consumer wants to fulfil its partial load through open
access, then there should be two separate meters so that the Open Access load can be
separated from the regulated load.
DISCOM Load Management Centres should also be provided necessary powers for
implementing suitable disciplinary actions for repeat/regular offenders whose actions
lead to grid imbalance as the Distribution grid discipline is necessary to maintain the
quality of power distributed.
Interstate Transmission corridor availability is a must.
DISCOM will need a robust IT system to handle settlement transactions similar to that of
SLDC and will require actual demand of the Open Access customer for monitoring on
real time basis.
In the Order dated 2 January 2013 , Case No. 50 of 2012 , MERC, some of the practical
solutions have be stated by various stakeholders which can be summarized as below:
o Capacity building at SLDC: SLDC needs to have the necessary technology,
expertise, manpower to handle such large number of Open Access approval
requests.
o Ring-fencing of SLDC: SLDC would have to be independent while executing its
authority of scheduling Open Access requests.
o Wheeling Capacity: For the purpose of Open Access only spare capacity
by inherent design margin and variation in power flow is available. This does not
assure Open Access consumer for continuous supply.
 Bulk Power Market – Power Traders and Power Exchanges should be available with
sufficient power and efficient working for good implementation of Open Access. If there
have been no Power traders then there will be a non synchronization between generators
and consumers.
Segregation of Wires and Supply Cost: Cost for wire business and power supply business
should be properly segregated so as to arrive at a consistent wheeling charge.
Wheeling losses should also be limited to technical losses and must exclude
commercial losses as most of the bulk consumers are connected at 11 kV and above,
whereas most of the commercial losses occur at below 11 kV level.
Technical Requirements for Open Access: Open Access consumers need to comply
with the various provisions of the MERC Distribution Open Access Regulations,
2005, as amended from time to time, regarding eligibility criteria, reduction of
contract demand, execution of connection, installation of Special Energy Meters,
Wheeling Charges, payment of cross subsidy surcharge, etc. MERC Order [ Case No.50
of 2012]
Nature of Usage: The type of Open Access consumer whether captive or not needs
to be ascertained by the Distribution Licensee prior to giving permission as it is linked to
payment of Cross Subsidy Surcharge (CSS).
Page 61
Capacity Building for Open Access Consumers: All Open Access consumers may not be
well versed with the procedures of Open Access, scheduling of power and other
activities. Hence, educating them becomes a necessity for promotion of OA.
Separate/dedicated Feeders: Bulk Consumers might need separate feeders for reliable
power supply, for which Distribution Licensee may have to set up infrastructure.
Installation of SEMs: Installation of SEM meters by all consumers above 1 MW. Intra
State ABT would be applicable to all Open Access consumers.
Coordination Mechanism: Need for proper mechanism to ensure coordination
between all concerned Distribution Licensee, State Transmission Utility, Open
Access Consumer, Generator, Load Despatch Centres at various levels, etc.
Connectivity with SLDC: In case of failure of Open Access generator, SLDC must
direct concerned host to limit its load to that extent in order to ensure smooth grid
operation. Such real time communication is not available for Open Access consumers
with SLDC currently.
Revenue Impact of Switching of Consumers: Recovery of expenditure, due to creation of
infrastructure, incurred by a Distribution Licensee for new consumer who after availing
Distribution Licensee's supply opts for Open Access.
Revenue Impact on account of switching of Cross-subsidising consumers: Revenue
loss due to migration of consumers (1 MW and above) as they are subsidising
consumers for consumers needs to be recovered from remaining consumers of
Distribution Licensee, which may lead to tariff increase.
Futures trade: Power exchange: In the absence of possibility of longer period
transactions (i.e. month ahead / half yearly / yearly / etc.), the bulk consumers of power
may not be able to plan their long term requirements. Until longer period transactions are
materialised, the bulk consumers would have limited options and consequently would
have to face the uncertainty of power prices.
Limitation on Over Drawl: If Open Access consumers do not take standby power from
Discoms, rather they draw power from Grid in case of failure of their MERC Order [
Case No.50 of 2012] Supplier's Generator, such power will flow through UI and many
times, system conditions may not permit drawl of power through UI.
Communication Infrastructure: Monitoring infrastructure (SCADA) also will have to be
in place.
Scheduling of non-solar generators below 10 MW and solar generators below 5 MW:
As per CERC (Terms and Conditions for Tariff determination from Renewable
Energy Sources) all non-solar generators below 10 MW and solar generators below
5 MW are not be subjected to scheduling and UI. However, deviations of these
generators will have impact on State UI. State UI cannot be apportioned to them, as their
deviations will not be captured. This issue will be needed to be handled in Intra-State
ABT mechanism.
Page 62
 Commercial Settlement: There are issues associated with one generator selling power to
number of consumers through Open Access. Implementation issues for Scheduling and
commercial settlement of such generator‟s energy needs to be looked in to.
Switching during Off-peak hours: Switching by consumers during off-peak hours to
Power exchange, etc., and returning back to Distribution Licensee for meeting their
Peak requirement, shall also be looked in to (source : 2 January 2013 , Case No. 50 of
2012 , MERC).
8.2 Financial Modelling: Conclusions and Recommendations
8.2.1 Conclusions
Cogeneration from sugarcane waste (bagasse) provides one of the best examples of
renewable based cogeneration yet it remains largely unexploited. The advantages of bagasse as a
fuel for cogeneration are numerous, ranging from the environmental to the social and economic.
Some advantages, such as increased security and diversity of supply or the furthering of aims of
sustainable development even apply across these categories.
Benefits and advantages of bagasse cogeneration include:

a) Increasing the viability of sugar mills
b) Near-zero fuel costs, paid in local currency and valuation of bagasse as a waste product
c) Increased fuel efficiency
d) Increasing diversity and security of electricity supply
e) Location at the point of energy demand, leading to minimal transmission and distribution
(T&D) costs.
The business of bagasse based cogeneration plant is a profitable one and has project
economics which are very much favourable to the investor. The Project economics have been
summarized as below:
Project Economics
Project IRR 17.57%
Equity IRR 15.35%
Minimum DSCR 1.30
Average DSCR 1.67
Thus, it is shown that that the business is very lucrative and entrepreneurs should be
interested in investing in such non-conventional power projects.
Page 63
8.2.2 Recommendations
In the sensitivity analysis, it is very well shown that major factors such as fuel price, plant
capital cost, plant load factor, et al have a direct impact on the tariff. Thus it should be a constant
effort from the producer to cut down on such costs and maximize their profits because the tariff
is set by the regulator and if they can reduce the cost of generation by effective management the
extra money thus made counts for their profit. Following measures can be taken to reduce the
cost of generation:
 Efficient project planning: The techniques of Operations research have shown to be

effective in the planning of the project. The techniques of Critical Path Method, Program
Evaluation Review Technique (PERT) have proven to be helpful in reduction of capital
cost; hence emphasis should be given on their application.
 Procurement of fuel at the right time: Time plays an important role in deciding the fuel
cost which has a subsequent effect on the tariff. Generators should maintain a healthy
relation with the farmers who eventually become their fuel suppliers in case of a bagasse
based power plant. A very successful case study is of Bermaco group who ar operating a
biomass based power plant.
 Deployment of agents to facilitate fuel procurement: Maintaining healthy relations with
farmers proves to be a difficult task for power producers. Agents, who are usually a part
of the cultivating family, are deployed as their agents who persuade farmers for timely
fuel procurement and at very competitive prices.
Renewable energy should be developed at very brisk rate, because the conventional fuel is not
slated to be available for a long time now. Also, fast development is required to achieve grid
parity. Consumers are the ultimate beneficiaries of this rapid development and producers should
take steps to ensure minimum tariffs for them.
Page 64
BIBLIOGRAPHY
Publications and Books

1 The Electricity Act, 2003
2 CERC (Terms and Conditions for Tariff determination from Renewable Energy Sources)
Regulations, 2009
3 CERC (Terms and Conditions for Tariff determination from Renewable Energy Sources)
Regulations, 2012
4 MERC (Terms and Conditions for Tariff determination from Renewable Energy Sources)
Regulations, 2010
5 MERC (Distribution Open Access) Regulations, 2005
6 MERC (Distribution Open Access) Draft Regulations, 2013
7 All renewable energy tariff orders of Maharashtra Electricity Regulatory Commission
8 FOR Report on Policies on Renewables , April 2009
9 TERI Report to CERC on Pricing of power from Non-Conventional Sources, 2008
10 CRISIL, “Assessment of Various Renewable Energy Resources Potential in Different States,
Determination of RPO Trajectory and its Impact on Tariff”, Forum of Regulators, June 2010
11 Annual reports and monthly magazines of Power Line 2012-2013
12 Kumar Alok, Chatterjee Sushanta K, “Electricity Sector in India”, Oxford University Press,
2012
13 InfralineEnergy Business report Series, “Open Access in Indian Power Sector”, April 2013
14 Commercial Circular No. 147, 154, 190 published by Mahavitran
15 Order of Case No. 50 of 2012
16 Order of Case No. 8,18, 20, 33 of 2012
Websites
1 www.mercindia.org
2 www.wisein.org
3 www.idfc.com
4 www.cercindia.org
5 www.forumofregulators.gov.in
6 www.google.com
Page 65
ANNEXURES
Page A
Open Access: Issues, Provisions, Policies and Charges in Maharashtra and Financial Modeling of 1 MW bagasse based Co-gen power
project in Maharashtra
Annexure A: Units generated in Bagasse Cogen plant
Particulars Units 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Installed capacity MW 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Gross generation MU 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256 5.256
Auxiliary consumption MU 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447 0.447
Net generation MU 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809 4.809
Table 25: Net generation
Page A
Annexure B: Variable Cost for Bagasse Cogen plant
Particulars Unit Value

Gross Station Heat rat kcal/kWh 3600
Gross Calorific Value kcal/kg 2250
kg per unit kg 1.6
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
units generated (MU) 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81
gross generation (MU) 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26 5.26
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Fuel requirement (T) 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60 8409.60
Cost (Rs. Lakhs) 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08
Variable cost per unit 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43
Table 26: Variable cost
Page B
Annexure C: Return on Equity
Rate for first 10 years 19% p.a

Rate 11th year onwards 24% p.a
Equity component 139.82 Rs. Lakhs
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Return on Equity (Rs. Lakhs) 26.57 26.57 26.57 26.57 26.57 26.57 26.57 26.57 26.57 26.57 33.56 33.56 33.56 33.56 33.56 33.56 33.56 33.56 33.56 33.56
MAT (@20%) 5.32 5.32 5.32 5.32 5.32 5.32 5.32 5.32 5.32 5.32 6.71 6.71 6.71 6.71 6.71 6.71 6.71 6.71 6.71 6.71
Table 27: Return on Equity
Page C
Annexure D: Interest on Loan Capital
Total Debt component 326.26 Rs. Lakh

Interest rate 12.87% p.a
Installment per year 32.63 (Rs. Lakhs)
Year 1 2 3 4 5 6 7 8 9 10
Opening balance (Rs. Lakhs) 326.26 293.63 261.00 228.38 195.75 163.13 130.50 97.88 65.25 32.63
Installment paid (Rs. Lakhs) 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63
Closing balance (Rs. Lakhs) 293.63 261.00 228.38 195.75 163.13 130.50 97.88 65.25 32.63 0.00
Interest Quantum (Rs. Lakhs) 39.89 35.69 31.49 27.29 23.09 18.90 14.70 10.50 6.30 2.10
Table 28: Interest on Loan Capital
Page D
Annexure E: Depreciation calculation
Total Project cost 466.08 Rs. Lakh

Depriciation for first 10 years 7% p.a
Depriciation 11th year onwards 2% p.a
Book Depriciation 5.28% p.a
Tax Depriciation (Accelerated Depriciation) 80.00% p.a
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Depriciation (Rs. Lakhs) 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63 9.32 9.32 9.32 9.32 9.32 9.32 9.32 9.32 9.32 9.32
Particulars Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Book depriciation 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 24.6 0.0 0.0
Cummulative depriciation (Rs. Lakhs) 24.6 49.2 73.8 98.4 123.0 147.7 172.3 196.9 221.5 246.1 270.7 295.3 319.9 344.5 369.1 393.7 418.4 443.0 443.0 443.0
Tax depriciation Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Opening balance (Rs. Lakh) 466.1 93.2 18.6 3.7 0.7 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Tax depriciation (Rs. Lakh) 372.9 74.6 14.9 3.0 0.6 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Closing balance (Rs. Lakh) 93.2 18.6 3.7 0.7 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Table 29: Depreciation
Page E
Annexure F: Operation and Maintenance Expenses
Base Price for 2010-11 14.11 Rs. Lakh

Escalation 5.72% p.a
Operative Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Year difference from 2010-2011 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Amount (Rs. Lakhs) 16.67 17.63 18.63 19.70 20.83 22.02 23.28 24.61 26.02 27.51 29.08 30.74 32.50 34.36 36.32 38.40 40.60 42.92 45.38 47.97
Per Month Expense (Rs. Lak 1.39 1.47 1.55 1.64 1.74 1.83 1.94 2.05 2.17 2.29 2.42 2.56 2.71 2.86 3.03 3.20 3.38 3.58 3.78 4.00
Table 30: O&M cost
Page F
Annexure G: Net Working Capital
For Fixed charges

O&M charges 1 months
Maintenance spares 15%
Receivables for debtors 2 months
For Variable charges
Biomass stock 4 months
Interest on working capital 13.37% %
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
O&M Charges (Rs. Lakhs) 1.39 1.47 1.55 1.64 1.74 1.83 1.94 2.05 2.17 2.29 2.42 2.56 2.71 2.86 3.03 3.20 3.38 3.58 3.78 4.00
Maintenance spares 2.50 2.64 2.80 2.96 3.12 3.30 3.49 3.69 3.90 4.13 4.36 4.61 4.88 5.15 5.45 5.76 6.09 6.44 6.81 7.20
Biomass Stock (Rs. Lakhs) 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03 55.03
Fixed cost 21.70 21.15 20.62 20.09 19.57 19.06 18.57 18.09 17.62 17.16 14.30 14.59 14.90 15.23 15.58 15.94 16.33 16.74 17.17 17.62
Variable cost 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51 27.51
Total Working Capital (Rs. Lakhs) 108.13 107.81 107.50 107.22 106.97 106.74 106.54 106.37 106.23 106.12 103.63 104.31 105.03 105.79 106.59 107.44 108.34 109.29 110.29 111.36
Interest on working capital (Rs. Lakh 14.46 14.41 14.37 14.34 14.30 14.27 14.24 14.22 14.20 14.19 13.85 13.95 14.04 14.14 14.25 14.36 14.49 14.61 14.75 14.89
Table 31: Net working capital
Page G
Annexure H: Fixed Cost calculation
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Return on Equity (Rs. Lakhs) 26.57 26.57 26.57 26.57 26.57 26.57 26.57 26.57 26.57 26.57 33.56 33.56 33.56 33.56 33.56 33.56 33.56 33.56 33.56 33.56
Interest on Long term loan (Rs. Lakhs) 39.89 35.69 31.49 27.29 23.09 18.90 14.70 10.50 6.30 2.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Depriciation (Rs. Lakhs) 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63 9.32 9.32 9.32 9.32 9.32 9.32 9.32 9.32 9.32 9.32
O&M charges (Rs. Lakhs) 16.67 17.63 18.63 19.70 20.83 22.02 23.28 24.61 26.02 27.51 29.08 30.74 32.50 34.36 36.32 38.40 40.60 42.92 45.38 47.97
Interest on working capital (Rs. Lakhs) 14.46 14.41 14.37 14.34 14.30 14.27 14.24 14.22 14.20 14.19 13.85 13.95 14.04 14.14 14.25 14.36 14.49 14.61 14.75 14.89
Total (Rs. Lakhs) 130.21 126.92 123.69 120.52 117.41 114.38 111.41 108.52 105.71 102.99 85.81 87.57 89.42 91.38 93.46 95.65 97.96 100.41 103.00 105.74
Net generation (MU) 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81
Fixed cost per unit (Rs.) 2.71 2.64 2.57 2.51 2.44 2.38 2.32 2.26 2.20 2.14 1.78 1.82 1.86 1.90 1.94 1.99 2.04 2.09 2.14 2.20
Table 32: Fixed cost calculation
Page H
Annexure I: Income Tax calculations
MAT Rate 20.008%

Corporate tax 32.45%
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
PBT (Book) 18.91 22.20 25.43 28.60 31.70 34.74 37.71 40.60 43.41 46.13 46.99 45.24 43.38 41.42 39.35 37.16 34.84 32.39 54.41 51.68
Add: Book Depriciation 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 0.00 0.00
Less: Tax Depriciation -372.86 -74.57 -14.91 -2.98 -0.60 -0.12 -0.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
PBT (tax) -329.35 -27.77 35.12 50.22 55.72 59.23 62.29 65.20 68.02 70.74 71.60 69.85 67.99 66.03 63.96 61.77 59.45 57.00 54.41 51.68
Carry forward losses -329.348 -357.117 -321.995 -271.772 -216.056 -156.825 -94.5324 -29.3301 0 0 0 0 0 0 0 0 0 0 0 0
Taxable income -329.35 -357.12 -322.00 -271.77 -216.06 -156.83 -94.53 -29.33 38.69 70.74 71.60 69.85 67.99 66.03 63.96 61.77 59.45 57.00 54.41 51.68
MAT (Rs. Lakh) 3.78 4.44 5.09 5.72 6.34 6.95 7.54 8.12 8.69 9.23 9.40 9.05 8.68 8.29 7.87 7.43 6.97 6.48 10.89 10.34
Corporate Tax (Rs. Lakh) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 12.55 22.96 23.23 22.67 22.06 21.43 20.75 20.04 19.29 18.50 17.66 16.77
Tax payable (Rs. Lakh) 3.78 4.44 5.09 5.72 6.34 6.95 7.54 8.12 8.69 9.23 9.40 9.05 8.68 8.29 7.87 20.04 19.29 18.50 17.66 16.77
Table 33: Income Tax
Page I
Annexure J: Levellised Tariff
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Per Unit variable cost (Rs./Unit) 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43 3.43
Per unit fixed cost (Rs./Unit) 2.71 2.64 2.57 2.51 2.44 2.38 2.32 2.26 2.20 2.14 1.78 1.82 1.86 1.90 1.94 1.99 2.04 2.09 2.14 2.20
Total cost (Rs./Unit) 6.14 6.07 6.00 5.94 5.87 5.81 5.75 5.69 5.63 5.57 5.22 5.25 5.29 5.33 5.38 5.42 5.47 5.52 5.57 5.63
Discount Factor 1 0.86 0.75 0.65 0.56 0.48 0.42 0.36 0.31 0.27 0.23 0.20 0.18 0.15 0.13 0.11 0.10 0.08 0.07 0.06
Levellised Tariff 5.81 per kWh
Table 34: Tariff determination
Page J
Annexure K: NPV and IRR calculations

Year Unit 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Units Generated MU 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81 4.81
Tariff Rs. Per Unit 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81 5.81
Total Cash Generated Rs. Lakh 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62 279.62
Interest on Working capital Rs. Lakh 14.46 14.41 14.37 14.34 14.30 14.27 14.24 14.22 14.20 14.19 13.85 13.95 14.04 14.14 14.25 14.36 14.49 14.61 14.75 14.89
Interest on long term loan Rs. Lakh 39.89 35.69 31.49 27.29 23.09 18.90 14.70 10.50 6.30 2.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total interest Rs. Lakh 54.35 50.10 45.87 41.63 37.40 33.17 28.94 24.72 20.50 16.29 13.85 13.95 14.04 14.14 14.25 14.36 14.49 14.61 14.75 14.89
Cash Outflows:
Variable Cost Rs. Lakh 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08 165.08
O&M expenses Rs. Lakh 16.67 17.63 18.63 19.70 20.83 22.02 23.28 24.61 26.02 27.51 29.08 30.74 32.50 34.36 36.32 38.40 40.60 42.92 45.38 47.97
Total Cash outflows Rs. Lakh 181.75 182.71 183.71 184.78 185.91 187.10 188.36 189.69 191.10 192.59 194.16 195.82 197.58 199.44 201.40 203.48 205.68 208.00 210.46 213.05
PBDIT Rs. Lakh 97.86 96.91 95.90 94.83 93.71 92.52 91.26 89.93 88.52 87.03 85.46 83.79 82.04 80.18 78.21 76.13 73.94 71.61 69.16 66.56
Less: Interest Rs. Lakh 54.35 50.10 45.87 41.63 37.40 33.17 28.94 24.72 20.50 16.29 13.85 13.95 14.04 14.14 14.25 14.36 14.49 14.61 14.75 14.89
PBDT Rs. Lakh 43.52 46.80 50.04 53.21 56.31 59.35 62.32 65.21 68.02 70.74 71.60 69.85 67.99 66.03 63.96 61.77 59.45 57.00 54.41 51.68
Less: Depreciation(Book) Rs. Lakh 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 0.00 0.00
PBT Rs. Lakh 18.91 22.20 25.43 28.60 31.70 34.74 37.71 40.60 43.41 46.13 46.99 45.24 43.38 41.42 39.35 37.16 34.84 32.39 54.41 51.68
Less: Tax Rs. Lakh 3.78 4.44 5.09 5.72 6.34 6.95 7.54 8.12 8.69 9.23 9.40 9.05 8.68 8.29 7.87 20.04 19.29 18.50 17.66 16.77
Profit After Tax Rs. Lakh 15.12 17.75 20.34 22.88 25.36 27.79 30.16 32.48 34.72 36.90 37.59 36.19 34.70 33.14 31.48 17.12 15.55 13.90 36.76 34.91
Fund Drawl Rs. Lakh -466.08

Infow: PBDIT-Tax Rs. Lakh 94.08 92.47 90.81 89.11 87.36 85.57 83.71 81.80 79.83 77.80 76.05 74.74 73.35 71.89 70.34 56.09 54.64 53.12 51.50 49.79
Inflow: Terminal Value Rs. Lakh 23.12
Net Cash Flow Rs. Lakh -466.08 94.08 92.47 90.81 89.11 87.36 85.57 83.71 81.80 79.83 77.80 76.05 74.74 73.35 71.89 70.34 56.09 54.64 53.12 51.50 72.91
Project IRR 17.57%
Equity IRR Computation

Equity cash outflow Rs. Lakh -139.82
PAT Rs. Lakh 0.00 15.12 17.75 20.34 22.88 25.36 27.79 30.16 32.48 34.72 36.90 37.59 36.19 34.70 33.14 31.48 17.12 15.55 13.90 36.76 34.91
Add: Depreciation Rs. Lakh 0.00 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 24.61 0.00 0.00
Less: Repayment Rs. Lakh 0 -32.63 -32.63 -32.63 -32.63 -32.63 -32.63 -32.63 -32.63 -32.63 -32.63 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Inflow Rs. Lakh -139.82 7.11 9.74 12.32 14.86 17.34 19.77 22.15 24.46 26.71 28.89 62.20 60.80 59.31 57.74 56.09 41.72 40.16 38.50 36.76 34.91
Equity IRR 15.35%
Table 35: NPV and IRR calculations
Page K
Annexure L: Debt Service Coverage Ratio
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Projected cash flow 94.08 92.47 90.81 89.11 87.36 85.57 83.71 81.80 79.83 77.80 76.05 74.74 73.35 71.89 70.34 56.09 54.64 53.12 51.50 49.79
Debt service
Loan Repayment 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63 32.63
Interest paid 39.89 35.69 31.49 27.29 23.09 18.90 14.70 10.50 6.30 2.10
Total debt service 72.52 68.32 64.12 59.92 55.72 51.52 47.32 43.12 38.92 34.73
Debt Service Coverage Ratio 1.30 1.35 1.42 1.49 1.57 1.66 1.77 1.90 2.05 2.24
Minimum DSCR 1.30
Average DCSR 1.67
Table 36: DSCR
Page L

Open Access Financial Modelling Feasibility

Încărcat de

Informații document

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Open Access Financial Modelling Feasibility

Încărcat de

Drepturi de autor:

Formate disponibile

OPEN ACCESS-

FINANCIAL MODELING OF 1MW BAGASSE BASED CO-GEN

Table 29: Depreciation.................................................................................................................... E

2.3.1 Section 8.5.1.................................................................................................................. 14

4.3.1 Transmission Charges ................................................................................................... 24

6.2 Regulatory and Legal perspective......................................................................................... 41

7.12.2 Power Generation .......................................................................................................... 52

1.1 Problem Statement

1.2 Significance of the project

1.3 Scope of work

1.3.1 Provisions for Open Access

1.3.2 Calculation of Open Access charges

1.3.3 Viability of Long Term distribution Open Access

1.3.4 Open Access and Renewable Energy

1.3.5 Identification and removal of impediments

Identification of various road blocks in the proper implementation of Open Access is

1.3.6 Determination of Tariff for 1 MW bagasse based cogeneration power project

1.3.7 Sensitivity Analysis of Tariff

1.4 Literature Review

1.5 Research Methodology

Validation of the collected data

Determination of Tariff and subsequent analysis

CHAPTER 2: OPEN ACCESS IN INDIAN POWER SECTOR

(I) Desired market signal for investment;

2.1 PROVISIONS FOR OPEN ACCESS IN THE ELECTRICITY ACT, 2003

2.1.1 Section 2(47)-Definition of open access:

“non-discriminatory provision for the use of transmission lines or distribution system or

2.1.2 Open Access in Transmission:

(2) The functions of the Central Transmission Utility shall be –

(i) any licensee or generating company on payment of the transmission charges; or

(2) The functions of the State Transmission Utility shall be –

Section 40 of the Act reads as follows:

“It shall be the duty of a transmission licensee –

2.1.3 Open Access in Distribution

2.1.4 Section 49: Agreements with respect to supply or purchase of electricity

2.1.5 Section 86: Functions of State Commission

2.2 PROVISION FOR OPEN ACCESS IN NATIONAL ELECTRICITY POLICY, 2005

2.2.1 Section 5.4.5

2.3 PROVISION FOR OPEN ACCESS IN NATIONAL TARIFF POLICY

2.3.1 Section 8.5.1

2.3.2 Section 6.3: Harnessing captive generation

2.3.3 Section 6.4:

2.3.4 Section 8.5:

CHAPTER 3: OPEN ACCESS CHARGES

1. Cross Subsidy Surcharge

3.1 CROSS SUBSIDY SURCHARGE

3.1.1 Policy provisions for Cross Subsidy Surcharge

3.1.1.1 National Electricity Policy

3.1.1.2 National Tariff Policy

i. It should not constraint introduction of competition

Cross subsidy surcharge mechanism as per NTP:

S=T-[C (1+L/100) + D],

L= System loss for the applicable voltage level, expressed as a percentage.

3.1.1.3 Miscellaneous Provisions

3.1.2 Alternative approaches for determining the Cross Subsidy Surcharge

 Avoided Cost of Power (as suggested by the NTP)

3.1.2.1 Avoided Cost of Power method

3.1.2.2 Average Cost of Supply

3.1.2.3 Cost of supply method

Cross Subsidy Surcharge (Paisa per unit)

3.2 ADDITIONAL SURCHARGE

3.2.1 Policy provisions for Additional Surcharge

3.2.1.1 National Electricity policy

3.2.1.2 National Tariff Policy

�� ℎ