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Green energy: CERC proposes alignment of financial norms with market rates

According to reports,

For renewable energy projects in the country, the Central Electricity Regulatory Commission (CERC) has proposed assured long-term tariff visibility and alignment of financial norms with the prevailing market conditions. In its draft tariff regulations, 2012, it has proposed the return on equity (RoE) to be revised keeping in view the increase in the Minimum Alternate Tax (MAT). Unlike the earlier three-year control period, the proposed period is for five years. The various proposals, except the capital cost norms for solar power, would remain valid for five years from April 1 next year.

CERC, which plans to launch these regulations from April next year, said the rate fixed for any project during the control period would be valid for 13 years for mature technologies like wind, small hydro projects (SHPs), biomass, co-generation and for twenty five years for upcoming ones like solar energy, biomass gasifier and biogas projects and SHPs below 5-Mw.

“CERC has reaffirmed its commitment to promote green energy. The existing norms for renewable energy sources are valid up to March 31 next year. It has initiated the exercise for framing renewable energy tariff norms for the next control period,” CERC chairman Pramod Deo said. He told Business Standard that CERC had balanced the investors’ interest through necessary incentives, while ensuring benefits of efficiency gains in terms of better operation and reduced costs for consumers.

To encourage harnessing of wind power in the low-wind regime, the CERC has proposed tariff norms for wind power density of less than 200 as well. The capacity utilization factor, a measure of assessing the likely generation from a wind plant over the year, has been fine tuned keeping in mind the technological advancement and the impact of an increase in hub height of the wind mill. “The revised norms are expected to encourage better technology, leading to the best possible utilization of the available wind power in the country. They would, in the long run, benefit consumers with better efficiency and reduced cost of generation,” Deo said.

The power regulator has also addressed the need for encouraging newer technologies like biomass gasifier and biogas-based power plants. In the absence of tariff norms, these technologies were not able to come up on a large scale. It has now proposed norms for feed-in tariff for these technologies. Through this tariff intervention, it is expected that small-sized biomass gasifier and biomass-based power plants would be set up at the tail end of the 11-KV distribution systems, which will, in the long run, contribute to sustainable development of rural India.

CERC has also addressed concerns regarding biomass fuel price. Based on a detailed review of the prevailing fuel price, the Commission has proposed revision in base fuel price for biomass projects and operational norms like the station heat rate and gross calorific value in order to promote new investments.

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