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India: CERC Issues Draft Regulations for Determination of RE Tariff

May 21, 2020


CERC has released the draft of its 2020 regulations for tariff determination from renewable energy (RE) sources, with comments invited until May 28, 2020.

The Central Electricity Regulatory Commission (CERC) has released the draft of its 2020 regulations for the “Terms and Conditions for Tariff determination from Renewable Energy Sources.” The national power sector regulator has now invited comments/ suggestions from industry stakeholders on the proposed draft bill, with a deadline set for May 28, 2020.

As per the notification issued by the commission, the regulations shall come into force on July 1, 2020, and unless reviewed earlier or extended by the Commission, shall remain in force up to March 31, 2023.

These regulations shall apply to cases where tariff for a grid-connected generating station or a unit thereof commissioned during the control period and based on renewable energy sources, is to be determined by the Commission.

The commission further detailed that “provided that in cases of wind power projects, small hydro projects, biomass power project with Rankine cycle technology, non-fossil fuel-based co-generation projects, solar PV power projects, floating solar projects, solar thermal power projects, renewable hybrid energy projects, renewable energy with storage projects, biomass gasifier based Central Electricity Regulatory Commission–Draft Renewable Energy Tariff Regulations, 2020 Page 6 power projects, biogas based power projects, municipal solid waste based power projects and refuse-derived fuel-based power projects, these regulations shall apply subject to the fulfilment of eligibility criteria.”

The draft bill also states that the generic tariff shall be determined by the Commission on an annual basis in accordance with these regulations. And, the generic tariff shall be determined, on levelised basis, considering the year of commissioning of the project.

For the tariff period of the project: Provided that for renewable energy projects having single part tariff with two components, fixed cost component shall be determined on levelised basis considering the year of commissioning of the project while fuel cost component shall be determined on the year of operation basis in the Tariff Order to be issued by the Commission.

The tariff for renewable energy sources will consist of components such as Return on equity, Interest on loan, Depreciation, Interest on working capital, and Operation and Maintenance expenses. For the determination of generic tariff and project-specific tariff a loan tenure of 15 years shall be considered.

The total capital cost of the RE project will be inclusive of all capital work including plant and machinery, civil work, erection and commissioning, financing, and interest during construction and evacuation infrastructure up to inter-connection point.

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