Biomass-based power producers cry for help

Amid growing regulatory and administrative uncertainties, biomass-based power producers have sought the intervention of the Forum of Regulators (FoR) for early resolution of issues relating to open access, cross-subsidy, CDM sharing, penalty clause imposed by certain distribution companies for not maintaining plant load factor and rate structure.

These producers have argued the rate fixed by the state electricity regulatory commissions is un-remunerative, as rising prices of biomass, which is sourced by producers against cash payments, are not taken into account properly. They say the revenue realisation takes two months to over a year, due to the rapidly-deteriorating financial position of state utilities. This has resulted in closure of some plants and others are suffering from mounting losses.

Indian Biomass Power Association, a representative body of biomass-based power producers, and Andhra Pradesh-based Shalivahana Green Energy in their separate presentations to the FoR, an apex body of power regulators, have highlighted that despite having the potential of generating 18,000 mw at present only 1,150 mw of biomass power projects were commissioned. And, some among these have closed or are in bad shape.
D Radhakrishna, secretary general, Indian Biomass Power Association, told Business Standard, “The Central Electricity Regulatory Commission (CERC) has introduced renewable energy certificates (REC) to encourage the renewable energy sector, and most state electricity regulatory commissions (SERCs) have framed the regulations in this regard. While this has been a positive development to make RE projects viable, some states are dissuading project developers to opt for the REC scheme to meet their renewable power obligations (RPO). Already, some states have revised their transmission and distribution charges manifold and also imposed cross-subsidy charges apart from bringing in new conditions.”

In effect, Radhakrishna said, the cost of getting REC, which is an incentive, was as high as the revenue from REC, thus negating the very objective of giving the incentive. Besides, there was no differentiation in REC entitlement for RE power from wind or solar energy that has no raw material cost unlike biomass, he added.

M Komaraiah, managing director, Shalivahana Green Energy, insisted the developer should be adequately compensated by way of availing the clean development mechanism (CDM) benefits exclusively without sharing with any agency/ beneficiary. In Madhya Pradesh, the state electricity regulatory commission has kept the rate mentioned in its order of 2007 unchanged vide its revised rate order of 2012, Komaraiah said. It even did not consider the rate regulations released by the Central Electricity Regulatory Commission while fixing the rate for biomass projects. The current rate is unattractive and unviable.

Komaraiah gave examples of Madhya Pradesh and Odisha, where inter-state open access was not allowed. “Inter-state open access is not allowed in Madhya Pradesh. Power Plants based on RE technologies are to be allowed for open access considering that they as green plants. However, due to high cross-subsidy and wheeling charges, the open access is a virtual reality in Odisha. Open access is not allowed by the state government citing Section 11of the Electricity Act, 2003,” said Komaraiah.

According to Komaraiah, distribution companies in Odisha have proposed to increase the rate of cross-subsidy surcharges to Rs 2.54 per unit, thus making open access difficult for the consumer and Industry. This high rate is seen as a measure to discourage consumers from seeking open access.

Moreover, bio-mass power producers have made a strong pitch for waiver of a clause relating to imposition of penalty for failing to maintain a certain level of plant load factor. They argued that this clause,which has been introduced by Odisha, be dropped as continuous maintenance of the plant load factor may not be possible, since generation mainly depends on the availability of bio-mass and this largely depends on rains in a particular year and place. The gross calorific value of bio-mass varies from place to place, season to season and fuel to fuel.




Mechanical engineer with experience in Power Plant maintenance , operation and auditing for ISI marked products. MBA in Power Management from National Power Training Institute, Faridabad. Working as Consultant for Bridge to India Pvt. Ltd. Expertise in: 1) Power sector regulations 2) Financial Modelling 3) Project Development solar PV plants 4) Strategic consulting 5) Report writing

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *