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Statutory Provisions for Promotion of Non-conventional Sources of Energy. Provisions under the Electricity Act,2003:The Commission shall promote generation from co-generation and renewable sources of energy, provide for connectivity with the grid and sale of electricity to any person(licensee and/o
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1. Promotion of Renewable Energy a presentation
by
R.D. Gupta, Member, UPERC
at
SAARC Summit on Renewable Energy
18th-19th April,2006, New Delhi
2. Statutory Provisions for Promotion of Non-conventional Sources of Energy Provisions under the Electricity Act,2003:
The Commission shall promote generation from co-generation and renewable sources of energy, provide for connectivity with the grid and sale of electricity to any person(licensee and/or a consumer) and specify a percentage of the total consumption, of the distribution licensee, to be purchased from such sources of energy (S.86(e)).
The Commission shall determine the tariff of supply of electricity by a generating company to a distribution licensee (S.62(1)(a)).
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3. Statutory Provision …………Contd. While determining the terms and conditions of tariff, the Commission shall have regards to promotion of co-generation and generation of electricity from renewable sources of energy guided by the provisions of National Electricity Policy and Tariff Policy (S.61(h)&(i)).
The Central Govt. shall prepare the National Electricity Policy and Tariff Policy (S.3).
2. National Electricity Policy
Private sector participation shall be encouraged for additional capacity addition from non-conventional energy sources (cl.5.2.2.0).
Effort should be made to reduce the capital cost of such projects (cl.5.12.1). 3
4. Statutory Provision …………Contd. Cost of energy can be reduced by promoting competition (cl.5.12.1).
Adequate measures for development of technology and sustained growth of these sources may be taken (cl.5.12.1).
Purchases from these sources shall progressively be through competitive bidding process (cl.5.12.2).
The Commission may determine appropriate differential in prices to promote these sources till time these technologies compete with conventional sources of energy in terms of cost
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5. Statutory Provision …………Contd. 3. Tariff Policy
Distribution companies shall purchase electricity from these sources at preferential tariff as determined by the Commission (cl.6.4(1)).
Future purchases shall be done through competitive bidding process and in long term these technologies would need to compete with other sources of energy (cl.6.4(2)).
CERC to issue guidelines for pricing non-firm power from these sources where the procurement is not through competitive bidding (cl.6.4(3)).
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6. UPERC Initiatives In pursuance of the provisions of the Act and the National Electricity Policy , the Commission published a draft Practice Directions for regulation of supply, inter alia, from these sources and an approach paper on determination of tariff for inviting comments, suggestions and objections, held hearing of interested parties and passed orders dated 18.7.05, 15.9.05 & 12.1.06 and Regulations based on the said papers, orders under relevant provisions of the Act, and the policy.
The said orders and Regulations are effective from 28.7.05 for 5 years. 6
7. UPERC Regulations for promotion of non-conventional sources of energy The distribution licensee shall purchase to the extent of 7.5 % of its total power purchase from such sources of energy (R.29).
Tariff for sale of electricity have been determined in respect of bagasse/biomass based co-generation plants, mini/micro/small hydro power plants and other non-conventional sources of energy like solar, municipal/industrial wastes and biogass etc. on the basis of normative parameters (R.30).
Such plants are allowed to sale electricity to any person (any other licensee and/or consumer) besides the distribution licensee of the area in which it is located but subject to provisions of the open access Regulations (R.31). 7
8. Provisions for promotion……… Contd. Such generating plants are allowed to bank energy for withdrawal in the event of emergency or shut down or maintenance of the plant(R.39).
Connectivity of the plants with the grid is specified on 33 KV for plants upto 10 MW and on 132 KV or above for plants above 10 MW. In exceptional cases, the Commission may allow evacuation of power at 11 KV (R.35).
These plants shall be subject to day ahead scheduling under ABT with the exception that generation on actual operation shall be deemed as the generation schedule (R.22).
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9. Provisions for promotion……… Contd. The tariff has been specified for 5 years, however, the purchases by distribution licensee shall be made through competitive bidding process among themselves as and when notified by the Commission.
For co-generation other than based on bagasse/biomass, the tariff shall be determined on the case to case basis.
These plants may adopt clean development mechanism and carbon trading and shall be allowed to retain the benefit
The transitional cost involved in such activities shall be a pass through in tariff in case no carbon credit is not available.
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10. Tariff Determination Following normative parameters have been considered for determination of tariff:
Co-generation ( based on baggase/biomass)
Capital Cost - Rs. 3.25 Cr./MW
Debt : Equity Ratio - 70:30
ROE - 16%
Rate of interest on loan - 10.25%
PLF - 60%
Auxiliary consumption- 8.5%
Price of fuel - Rs.740/MT
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11. Tariff Determination…………. Contd. Co-generation
Fuel price escalation - 6%
SHR - 3300 K.Cal/Kwh
O&M Expenditure - 2.5% of capital cost
O&M Escalation - 4%/annum
Depreciation - 7%
IWC - 10.25%
Cost of transmission line- Rs. 0.25 Cr./MW
Incentive (above PLF) - 3 Paisa/unit in off season
Escalation in capital cost- 3% per year
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12. Tariff Determination…………. Contd. 2. Mini/ Micro/small canal based hydro plants upto 25 MW
Capital Cost - Rs. 4.5 Cr./MW
Debt : Equity Ratio - 70:30
ROE - 16%
Rate of interest on loan - 10.25%
PLF - 35%
Auxiliary consumption- 1.0%
Depreciation - 7%
IWC - 10.25% 12
13. Tariff Determination…………. Contd. Hydro plants
O&M Expenditure - 2.5% of capital cost
O&M Escalation - 4%/annum
Incentive (above PLF) - 21.5 Paisa/unit
Escalation in capital cost- 3% per year
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14. Tariff Determination…………. Contd. 3. Other NCE Plants
base rate for 2005-06 - Rs.2.50/KWh
Annual escalation - 4%
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15. Banking Banking is allowed for withdrawl of energy in the event of emergency or shut down or maintenance of plant under following conditions.
Banking is allowed in case the plant has an agreement with the licensee for supply and purchase of electricity
Banking of energy is allowed during 17 Hrs. to 22 Hrs.
Withdrawl is allowed during the period other than 17 Hrs. to 22 Hrs.on deduction of 12.5% of energy as banking charges.
The plant shall be billed for the maximum recorded demand.
Energy charge, for supply of power to the plant, shall be the rate specified in the retail tariff of the relevant category
Excess load over and above the declared load shall be charged as per the provision in the relevant schedule of tariff.
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16. Banking… Contd… Withdrawal of the accumulated banked energy is allowed during financial year or in the following year.
Banked power remaining unutilized after the following year shall be treated as sale to the licensee without deduction of banking charges.
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17.
Thank You
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