HomeIndustry Central Electricity Regulatory Commission lowers return on equity for renewable energy projects Central Electricity Regulatory Commission lowers return on equity for renewable energy projects
The Central Electricity Regulatory Commission (CERC) has set the return on equity (RoE) for renewable energy projects at 14%.
The Central Electricity Regulatory Commission (CERC) has set the return on equity (RoE) for renewable energy projects at 14%. The post-tax rate, which will be valid for the period of FY18 to FY20, is two percentage points below the RoE set in the 2012 tariff regulations. The value base of the equity will be determined on 30% of the capital cost. The rate was calculated taking into account a market premium of 700 basis points over the prevailing six-month average government security rates. These tariffs would be applicable to projects in which tariffs were not determined by competitive bidding. Though various solar and wind projects have started taking the competitive bidding route, the process is not feasible for many smaller projects, mainly those belonging to the bio-mass and the small hydropower categories, owing to their lower generation volumes.
As on February, installed capacity of non-solar and non-wind renewable power was more than 14 GW. Overall renewable energy capacity stood at 52.8 GW. Solar and wind tariffs have recently touched new lows after taking the competitive bidding route. In the first ever tariff based reverse auction conducted in February, wind tariffs fell to Rs 3.46/unit. According to ICRA, feed-in tariffs for wind vary around Rs 4.16/unit to Rs 5.76/unit for wind power projects in states with high wind power generation potential.