Draft MERC RE Tariff Regulation

MERC has come up with draft RE Tariff Regulations for new control period. The salient features of the same are:

  • Definition of Hybrid Technologies: Hybrid Renewable Energy Project means a Renewable Energy Project that uses a combination of Renewable Energy technologies approved by MNRE for electricity generation within the same premises
  • Interconnection point for wind and solar has been specified as the line isolator on the outgoing feeder on the HV side of the Pooling sub-Station
  • Repowering defined as the process of replacing older wind turbines, operational for at least 15 years of useful life since their commissioning, with newer ones that have either a higher name plate capacity or higher efficiency which results in a net increase in power generated from the same site
  • In respect of competitive bidding Commission shall adopt the tariff for a RE Power Project where such tariff has been determined through a transparent process of competitive bidding in accordance with guidelines as may be issued by the Central Government under Section 63 of the Act
  • For wind projects tariff period is specified as 13 years, while for solar it is 25 years
  • Project specific tariff to be determined on case to case basis upon filing of petition by project entity for hybrid projects
  • Discount factor equivalent to the normative post-tax weighted average cost of capital shall be considered – for base year it comes as 11.28%
  • Treatment of plants as must run and shall not be subjected to ‘merit order despatch’, however if an appropriate framework for scheduling and forecasting is developed same may be adopted
  • Financial Principles
  1. Loan Period: 12 years @ SBI Base Rate prevailing during the previous year plus 300 basis points
  2. Depreciation: 5.83% for 1st 12 years and remaining spread over useful life
  3. RoE: 16% grossed with MAT for 1st 10 years and applicable tax rate for remaining life
  4. Working Capital: O&M expenses 1 month, Receivables of 2 months at normative CUF and maintenance spares at 15% of O&M expenses
  5. Interest on Working Capital: SBI Base Rate prevailing during the previous year plus 350 basis points

Payment of bills of the Project Entity through LC, a rebate of 2%; mode other than through LC within one month a rebate of 1%

Late payment surcharge at the rate of 1.25% per month for payment beyond 60 days

  • Entire proceeds of carbon credit from approved CDM Project will be kept by project entity
  • Taxes and duties levied by the appropriate Government on generation and sale of electricity from such RE Project shall be allowed as a pass through on an actual incurred basis.
  • Wind capital cost 597.79 Lakhs/MW linked to CERC indexation for future years
  • CUF: 22% – Zone 1 25% – Zone 2; 30% – Zone 3 and 32% – Zone 4; CUF methodology altered and new certification by MEDA at 80 metre hub height
  • O&M expenses: 1.47% of capital cost escalated @5.72% p.a. for future years
  • Solar 605.85 Lakhs/MW for FY 16; CUF 19%
  • O&M expenses: 13 Lakhs/MW escalated @5.72% p.a. for future years
  • Rooftop and small scale solar (upto 5 MW) tariff will be 0.50/kWh higher than large scale plants
  • Tariff expected:
  1. Wind: Zone 1: 5.67/kWh (5.70/kWh); Zone 2: 4.99/kWh (5.01/kWh); Zone 3: 4.16/kWh (4.18/kWh); Zone 4: 3.90/kWh (3.92/kWh)
  2. Numbers in brackets are tariffs of last year of previous control period; tariff reduced inspite of increase in capital costs owing to different discount rate in this period.
  3. Solar: 7.06/kWh (7.95/kWh); Solar rooftop and small scale solar (upto 5 MW): 7.56/kWh (8.45/kWh)

The last date for sending comments is 17th August 2015.

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3 Responses

  1. Can you provide me the link to access and submit comments.

  2. raaj says:

    why SERC are silent after contract period what are winf producers supposed to do if procureres refuse to but power stating that the tariff is applicable to new units classical example of creative destruction

  3. Guneet says:

    You can follow the guidelines for submission of comments given in public notice.(http://www.mercindia.org.in/pdf/Order%2058%2042/Public_Notice_RE_tariff_Regulations_Eng.pdf)

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