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The Bihar Electricity Regulatory Commission (BERC) has initiated a process to determine the generic levellized tariff for power generated from renewable energy sources for the financial year 2024-25. This move is part of an effort to promote the use of renewable energy by setting tariffs that reflect the costs of power generation from such sources. The draft proposal covers several types of renewable energy projects, including biomass power projects using Rankine cycle technology, non-fossil fuel-based cogeneration plants, biomass gasifier power projects, and municipal solid waste (MSW) or refuse-derived fuel (RDF) projects.
The Commission is conducting a public consultation on the proposed tariffs, inviting stakeholders and the general public to submit their comments, suggestions, or objections. These can be submitted until October 1, 2024, either in writing or by appearing at the scheduled public hearing on October 8, 2024. The consultation paper and proposed tariffs are available for free on the Commission’s website.
The process involves setting tariffs based on regulations established in 2022, which define the terms and conditions for determining tariffs from renewable energy sources. The tariff-setting process takes into account the specific characteristics of each type of project, such as the type of technology used, operational costs, and the life expectancy of the project. For instance, biomass power projects and non-fossil fuel-based cogeneration projects are given a 25-year lifespan, whereas small hydro projects have a longer lifespan of 40 years.
For the fiscal year 2024-25, the Commission has set out specific capital costs for different renewable energy technologies. For example, the capital cost for biomass projects with water-cooled condensers is set at 559 lakhs per megawatt, while the cost for projects using air-cooled condensers is slightly higher. The proposed tariffs are intended to remain in effect for all renewable energy projects commissioned up to March 31, 2025, with provisions for an extension if the Commission does not issue a subsequent tariff order by that time.
The tariff structure includes a single-part tariff for fixed-cost components such as return on equity, interest on loans, depreciation, and operational and maintenance expenses. In the case of projects with fuel costs, like biomass power projects, a two-component tariff structure is used, incorporating both fixed and fuel cost elements. For tariff calculations, the Commission uses a discount factor of 9.81%, derived from the post-tax weighted average cost of capital.
The proposed levellized tariffs are designed to reflect the costs associated with renewable energy projects. The tariff for biomass gasifier power projects is set at 9.22 rupees per kilowatt-hour, while non-fossil fuel-based cogeneration projects are proposed at a tariff of 7.52 rupees per kilowatt-hour when using bagasse as a fuel source.
Additionally, the Commission has established norms for capital costs, debt-equity ratios, and other financial assumptions, such as a normative return on equity of 14%. Depreciation rates are set at 7% per annum for the first ten years of a project’s life, followed by a lower rate for the remaining useful life of the project. In summary, the BERC’s proposed tariffs for renewable energy projects aim to balance the costs of these projects with the need to encourage investment in clean energy. The public consultation process ensures that stakeholders have an opportunity to provide input before the final tariffs are established for the upcoming financial year. |
