CERC TARIFF REGULATIONS FOR RENEWABLE ENERGY PROJECTS

Scope
These Regulations shall apply for tariff of Renewable Sources of Energy to be determined by Commission u/s 62 and 79 of EA,2003. These Regulations shall apply in case of wind power, small hydro, biomass power, non-fossil fuel based cogeneration, Solar PV, solar Thermal subject to fulfillment of certain eligibility criteria.

Eligibility Criteria
Wind Power: - Annual mean wind power density 200 W/m2 Small hydro: - Capacity 25 MW at single location Biomass: - Plants based on Rankine Cycle technology. - Fossil fuel restricted to 15% of total fuel consumption on annual basis. Solar PV & Thermal : Based on technology approved by MNRE. Non Fossil fuel Co-generation : Power generation and utilization of thermal heat for other industrial activities.

Control Period or Review Period

Control period = Period during which norms remains valid.
3 years (first year upto 31.03.2010) Benchmark capital cost for Solar PV and Solar Thermal Projects may be reviewed annually.

Tariff Structure
-Single Part Tariff -Fixed Cost Component:
ROE Interest on term loan Depreciation Interest on working capital O&M Expenses

-RE Technologies having fuel component like Biomass, non-fossil fuel cogeneration shall have two componentFixed Cost and fuel cost.

Tariff Design

Generic Tariff shall be on Levelised basis for the tariff period.

Discount factor shall be equivalent to weighted average cost of capital. Levellisation shall be carried out for the useful life while tariff shall be specified for Tariff Period.

Tariff Period and Useful Life

Tariff Period Wind energy Solar PV/Thermal Small Hydro 5 MW Small Hydro < 5 MW
Biomass (+) non-fossil fuel cogeneration

Useful Life 25 25 35 35 20
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13 25 13 35 13

Dispatch Principles
All RE Power except biomass plants with capacity of 10 MW and above and non-fossil fuel cogeneration plants shall be treated as MUST RUN. Biomass plants of 10 MW and above and Non-fossil fuel cogeneration plants shall be subjected to scheduling & Despatch code as per IEGC and UI Regulations.

Financial Principles
Capital Cost
Plant & machinery, Civil work Erection & Commissioning Financing, IDC Evacuation infrastructure upto interconnection point.
For project specific tariff determination, breakup of capital cost to be submitted to Commission.

Financial Principles
Debt:Equity

- For generic tariff: 70:30

- Equity > 30% of capital cost, excess equity shall be treated as normative loan. - Equity < 30% of capital cost, actual equity shall be considered for tariff. Loan Tenure: 10 years Interest Rate: Normative Interest Rate shall be average of LTPLR of SBI prevalent during the previous year plus 150 basis point. Depreciation: first 10 years 11th year onwards ROE: first 10 years 11th year onwards : 7% : Spread over remaining useful life. : Pre tax 19% : Pre tax 24%
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Financial Principles
Interest on Working Capital(IWC): Wind Energy/Small Hydro/Solar PV/SolarThermal.
- O&M : 1 month - Receivables : 2 months - Maintenance Spares :15% of O&M

Biomass/ Non-fossil fuel cogeneration

-Fuel Cost :4 months -O&M :1 month -Receivables : 2 months - Maintenance Spares :15% of O&M

IWC shall be average of SBI ST PLR during previous year plus 100 basis point.

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Financial Principles
O&M:
First year of Control Period: As specified under Regulations. Subsequent year to be escalated @ 5.72% per annum.

Subsidy or incentive by the Central / State Government:

Any incentive or subsidy offered by the Central or State Government, including accelerated depreciation benefit if availed by the company, shall be taken into consideration for tariff determination.

Taxes & Duties:

Allowed as pass through on actual incurred basis.

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Project Specific Tariff

MSW RE Projects commissioned before notification. Solar PV and Solar Thermal (if opted for project specific tariff). Hybrid Solar Thermal. Biomass projects other than Rankine cycle.
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Sharing of CDM Benefits

Year First Year Second Year
Project Developer Beneficiaries

100 % 90 %

0% 10 %

Third Year Fourth Year

Fifth Year Sixth Year onwards

80% 70%
60% 50%

20% 30%
40% 50%
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CAPITAL COST (FY 2011-12)

Wind Energy: Small Hydro:
Rs. 492.52 Lakhs/MW

HP, Uttarakhand, NE States:

Rs. 669.42 lakh/MW < 5 MW. Rs. 602.48 lakh/MW for 5 MW to 25 MW

Other States: Biomass Plant: Non-fossil fuel cogeneration: Solar PV Plant: Solar Thermal :
Rs. 525.97 lakh/MW < 5 MW Rs. 478.16 lakh/MW for 5 MW to 25 MW. Rs. 426.03 lakhs/MW Rs. 421.30 Lakh/MW. Rs.1442 Lakh/MW. Rs. 1500 lakh/MW

The above capital cost shall be subject to specific indexation mechanism for three years.
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O&M Expenses (FY 2011-12)

Normative O&M expenses during First year.

Wind Energy :
Small Hydro:

Rs. 7.26 lakh/MW

HP, Uttarakhand, NE States:

Rs. 23.47 lakh/MW < 5MW Rs. 16.77 lakh/MW for 5 MW to 25 MW.

Other States:
Rs. 19.00 lakhs/MW < 5 MW Rs. 13.41 Lakh/MW for 5 MW to 25 MW. Solar PV Project:Rs. 10.06 lakh/MW. Solar Thermal : Rs 14.53 lakh/MW Biomass: Rs. 22.63 Lakh/MW

Non-fossil Cogeneration:

Rs. 14.92 lakh/MW

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Auxiliary Power Consumption (APC)

Wind SHP Biomass Solar Thermal Solar PV Non-Fossil Fuel Co-generation : Nil : 1% : 10% : 10% : Nil : 8.5%

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Capacity Utilization Factor (CUF)

Wind:
200-250 W/m2 250-300 W/m2 300-400 W/m2 >400 W/m2 - 20 % - 23 % - 27 % - 30 % - 45%

SHP : Solar: Biomass:

HP,UK,NE States

Other States
PV Thermal During Stabilization

- 30%
- 19% - 23% - 60%

During Remaining Period (I Yr )

From II Yr

- 70%
- 80 %

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Calculated Tariff
Technology CUF Levelised Tariff(CERC)

Wind Energy 200-250 W/m2 250-300 W/m2 300-400 W/m2 >400 W/m2 Solar Thermal Energy Solar PV Energy Small Hydro Energy
>5 MW HP, NE, hills, 5-25 MW HP, NE, hills >5 MW other state 5-25 MW other state

20% 23% 27% 30% 23% 19%

5.33 4.63 3.95 3.55 15.04 15.39

45% 45% 30% 30% 1st Year 65%, 2nd year 80%

3.78 3.22 4.49 3.84 3.44 3.52

Biomass Energy (calculation for MP)

Thank You

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