According to reports, The Central Electricity Regulatory Commission (CERC) plans to review tariff determination norms for biomass power projects to allow developers pass the increase in fuel costs to users.
The regulator has taken the decision to review tariff guidelines for biomass power plants on a request from the ministry of new and renewable energy (MNRE), sources said. The ministry has swung into action because many biomass plants closed down in states like Punjab, Rajasthan and Chhattisgarh due to high fuel costs.
While future biomass plants will definitely benefit from the revision of guidelines, the regulator is also examining the possibility whether new norms can also be extended to existing plants that have already signed power purchase agreement. The CERC plans to seek a legal opinion on this matter soon.
India has the potential to generate 17,000 Mw from surplus agriculture biomass. Against that, it has so far harnessed 2,300 Mw potential. These plants use agriculture and forest residues as fuel. Due to uncertainty about the availability of these residues, their prices vary from season to season.
Managing fuel supply chain through contracts is difficult as there is no price guarantee in the biomass fuel market, according to industry experts.