TNERC proposes tariff hike for wind energy

Monday, 06 October 2014 21:59 Lathish PV

TNERCThe Tamil Nadu Electricity Regulatory Commission (TNERC) is proposing to increase power tariff by about eight paisa for wind energy in Tamil Nadu. Industry representatives have said that the proposed increase is not enough to for the state to be an attractive destination for investors. They have also opposed the TNERC's decision to proceed with its monthly adjustment of energy banking.

The Commission has published consultative papers on fixing tariff for wind- and bagasse-based cogeneration projects and has asked for feedback by October 27. It has also come out with a consultative paper on power procurement by distribution licensees from biomass-based power plants.

In the consultative paper, the Commission has pegged wind energy tariff at Rs 3.59 a unit. The prevailing tariff for wind energy is Rs 3.51 a unit for wind mills commissioned on or after a previous order dated July 31, 2012.

D V Giri, Secretary General, Indian Wind Turbine Manufacturers Association, said the tariff in the state is the lowest even though the plant load factor PLF) is better than other states. Tamil Nadu accounts for 37% of the country's installed wind energy capacity.Of the total capacity, around 60% is captive, while the balance goes to the state distribution company.
Capacity addition in the wind energy sector in Tamil Nadu continues to drop year on year. From a peak of 1083 MW added in a single year in 2012-13, it has dropped to 107 MW in 2013-14. Industry representatives say that the capacity addition in FY-2015 will be about 250 MW. Till May, this year, the capacity addition has been 10 MW.

The average PLF in Tamil Nadu is 30-32%, while in Andhra Pradesh the tariff is at 4.70 with average PLF of 26-28%. Madhya Pradesh's tariff is Rs 5.92 per unit and the average PLF is around 20-22%.

"Though the PLF in Madhya Pradesh is far lower, the tariff of Rs 5.92 is very attractive for the investor, and over and above that he gets 50 paise as GBI (generation based incentive) which is not available in Tamil Nadu," said Giri.

The Commission explained that it has adopted a two-part tariff as it did in the previous order of July 2012. This is done when the fuel cost varies and is taken as pass through. The fixed cost for a 20-year period ranges from Rs 1.34-1.81 per unit, while variable cost for financial year 2014-15 is pegged at Rs 2.39, and for 2015-16 at Rs 3.07 a unit.

Effectively, the tariff for the two years will be Rs 4.74 and Rs 4.90 a unit for new cogeneration plants. In the last order, the tariff in the first year was Rs 3.76 a unit.

The proposed policy of monthly adjustment of banking is also detrimental to the industry, said Giri. The association has requested TNERC to continue the present policy to attract investment.

Source- Business standard