OERC sets tariffs and guidelines for Odisha's renewable energy projects

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OERC sets tariffs and guidelines for Odisha's renewable energy projects

OERC sets tariffs and guidelines for Odisha's renewable energy projects

Industry News
Dec 15,23

This tariff framework will be applicable over a three-year financial period, starting from the commencement of the fiscal year 2023-24 and concluding at the end of the fiscal year 2025-26 for all renewable power projects.

OERC sets tariffs and guidelines for Odisha's renewable energy projects

The Odisha Electricity Regulatory Commission (OERC) has established the generic tariff and pricing structures for various renewable energy projects, encompassing small hydro, biomass, and non-fossil fuel-based co-generation power initiatives.

For small hydroelectric projects, the control period extends from the beginning of FY 2023-24 to the end of FY 2027-28. The determined tariff, based on specified principles, applies to renewable energy projects commissioned during this period and remains constant throughout the project's useful life.

The primary method for selecting renewable energy projects during this timeframe will be through a transparent competitive bidding process. However, in cases where projects are developed under the bidding or memorandum of understanding route, the generic tariff outlined in this order acts as the ceiling rate or upper limit.

GRIDCO or power distribution companies have the flexibility to negotiate a lower tariff with project developers through bilateral agreements.

The tariff period aligns with the useful life of the projects and begins from the date of their commercial operation. Competitive bidding for renewable energy procurement is applicable for the entire tariff period, spanning from fiscal year 2023-24 to FY 2025-26.

Small Hydro Projects

For small hydro projects during the control period (FY 2023-24 to 2027-28), the capital cost is set at Rs 78 million ($936,136)/MW for projects below 5 MW and Rs 90 million ($1.08 million)/MW for projects between 5 MW and 25 MW. This capital cost remains valid for the entire control period unless reviewed by the Commission.

The normative Capacity Utilisation Factor (CUF) considered is 30% to determine the tariff. Operation and Maintenance (O&M) expenses for the first year of the control period are Rs 3.77 million ($45,246)/MW for projects below 5 MW and Rs 2.73 million ($32,764)/MW for projects between 5 MW and 25 MW. Subsequent years' O&M expenses will escalate at 3.84% per annum.

The levelised tariff for small hydro projects below 5 MW is Rs 5.93 ($0.071)/kWh for 40 years, and for projects between 5 MW and 25 MW, it is Rs 5.82 ($0.070)/kWh.

Biomass Projects

For biomass projects based on rankine cycle technology, the capital cost is Rs 55.9 million ($670,881)/MW with a water-cooled condenser and Rs 60 million ($720,087)/MW with an air-cooled condenser for FY 2023-24.

The Plant Load Factor (PLF) for determining the generic tariff is 80%. Auxiliary power consumption is 10% for water-cooled condensers and 12% for air-cooled condensers.

O&M expenses for the first year of the control period are Rs 4.82 million ($57,847)/MW, escalating at 3.84% per annum in subsequent years. During the first year, the biomass fuel price is Rs 4,118 ($49.42)/MT, increasing by 5% annually.

Using fossil fuels is prohibited for biomass-based power projects commissioned during the control period.

Non-Fossil Fuel-Based Co-Generation Projects

The normative capital cost for non-fossil fuel-based co-generation projects is Rs 49.2 million ($590,471)/MW for the first year of the control period. The PLF for determining the generic tariff is 53%, with auxiliary power consumption set at 8.5% of gross energy generation.

O&M expenses for the first year are Rs 2.55 million ($30,603)/MW, escalating at 3.84% per annum in subsequent years. Bagasse fuel costs Rs 2,632 ($31.6)/MT during the first year, with a 5% annual escalation.

The normative CUF for wind projects in Odisha is 22%, estimated considering an annual mean wind power density of 220 watts per sq.m.

Earlier this year, OERC approved a power purchase agreement between Grid Corporation of Odisha and ACME Odisha Solar Power for a 25 MW solar project at a tariff of Rs 7.25 ($0.089)/kWh.

Source: Mercom India