The Central Electricity Regulatory Commission (CERC) has proposed capital cost of Rs 5.75 crore per Mw for wind energy projects.
The proposal is a part of the regulations the commission released recently and will be used to determine tariff of renewable energy for 2012-17.
The power regulator has proposed a loan tenure of 12 years for determination of tariff, annual depreciation rate of 5.83 per cent for the first 12 years of the tariff period and the rest of the depreciation to be spread over the remaining useful life of the project from the 13th year. Pre-tax return on equity has been stipulated at 20 per cent per annum for initial 10 years and at 24 per cent per annum for the subsequent period, while 16 per cent post-tax return has been proposed to attract investments. The regulations would come into force from April 1 and remain for five years.
Further, CERC said the capital cost for wind energy project would include wind turbine generator, including its auxiliaries, land cost, site development charges and other civil works, transportation charges, evacuation cost up to inter-connection point, financing charges and interest during construction. Project cost varies with technology, size of the projects, cost of infrastructure, statutory charges and fees.
The tariff period for renewable energy power projects, except in case of hydro projects below 5 Mw, solar photovoltaic, solar thermal, biomass gasifier and biogas based power projects, will be for a minimum of 13 years. In case of small hydro projects below 5 Mw, the tariff period would be 35 years and 25 years for solar photovoltaic and solar thermal power projects. It would be 20 years for biomass gasifier and biogas-based power projects.
The normative capital cost for setting up solar photovoltaic power project would be Rs 10 crore per MW for FY 2012-13. The normative capital cost for setting up solar thermal power project was estimated at Rs 13 crore a MW for FY 2012-13.
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The normative capital cost for biogas-based power would be Rs 11 crore a Mw (FY 2012-13 during first year of control period) and it would be linked to indexation formula as outlined under Regulation 77. After taking into account capital subsidy, net project cost would be Rs 8 crore a MW for FY 2012-13. The normative capital cost for the biomass power projects based on Rankine cycle would be Rs 4.45 crore a MW for FY 2012-13 during first year of control period)
The control period of five years has been specified in the final regulations. Considering the comments received from stakeholders, the regulatory commission has decided to review the biomass price at the end of third year of the control period to capture the volatility in the biomass fuel market.
A project would qualify as a biomass gasifier-based power project if it is using new plant and machinery and has a grid connected system that uses 100 per cent producer gas engine, coupled with gasifier technologies approved by ministry of new and renewable energy.
CERC’s tariff regulations come at a time when installed capacity of renewable energy has grown from a mere 20 Mw in 1989 to around 21,000 Mw in 2011.
It is fast replacing fossil fuel-based power generation. Installed capacity of renewable energy has already touched 12 per cent of the installed power capacity. During the XI Plan, the component of renewable energy exceeds 23 per cent of power added to the grid.