Staff Paper
Determination of Tariffs for NRSE Projects
The Punjab State Electricity Regulatory Commission (Commission) in its
Order dated 13.12.2007 determined the tariffs for various types of NRSE projects/technologies (Annexure-1). Subsequently Central Electricity Regulatory
Commission (CERC) notified its Central Electricity Regulatory Commission
(Terms & Conditions for Tariff determination from Renewable Energy Sources)
Regulations 2009 (RE Regulations) and its first amendment. Recently, CERC on the basis of a suo motu petition issued an Order dated 26.4.2010 for determination of generic tariff for the renewable energy (RE) technologies for which norms have been provided in the afore mentioned regulations for the RE
Projects to be commissioned in FY 201011 i.e second year of the three year’s
Control Period or Review Period 2009-10 to 2011-12. It is proposed to adopt the
RE Regulations mutatis mutandi and also determine the generic tariffs for RE
Projects to be set up in the State.
2. CERC has carried out an exhaustive exercise for determination of State specific generic tariffs for different types of RE projects. However, Regulation 22 of the RE Regulations stipulate that any incentive or subsidy offered by the
Central or State Govt. including accelerated depreciation benefit, if availed, by the generating company is also to be taken into consideration while determining the tariffs. Although CERC has factored in the accelerated depreciation benefit, other incentives/benefits have not been considered. Accordingly, it is proposed to adopt the generic tariffs determined by CERC in their Order dated 26.4.2010, after factoring in the incentives/subsidies offered by the Central and State Govt.
The proposed generic tariffs so determined, for Bio-mass based projects
(Annexure-2), Non-Fossil fuel based Co-generation projects (Annexure-3), Small
Hydro projects (Annexures-4&5), Solar Power projects & Wind Power projects
(Annexure-6) are enclosed. The proposed generic tariffs shall be applicable for

the projects commissioned in FY 2010-11 for the following tariff period as per the
RE Regulations:
S. No.
1
2
5
6
3
4
Renewable Energy projects
Biomass
Non-fossil fuel Co-generation
Small Hydro (Below 5 MW)
Small Hydro (5 to 25 MW)
Solar PV and Solar Thermal
Wind Energy
Tariff Period
Years
13
13
35
13
25
13
Useful Life
Years
20
20
35
35
25
25
3. These generic tariffs shall be applicable for the projects strictly meeting with the Eligibility Criteria specified in Regulation 4 of RE Regulations and also complying with Regulations 41 & 42 in respect of use of fossil fuel and its monitoring mechanism (to be set up by the Commission) for Bio-mass and Nonfossil fuel based Co-generation projects. Also, these tariffs are exclusive of taxes and duties as may be levied by the Government which are allowable as pass through on actual incurred basis as provided in Regulation 23 of RE Regulations.
Further, sharing of CDM benefits shall be as per Regulation 21.
4. Any scheme/policy initiatives whether incentives (generation based or others), migration scheme or other schemes offered by Ministry of New and
Renewable Energy and/or Ministry of Power, Govt. of India from time to time would be applicable in toto for Solar as well as other categories of RE power including Wind, Bio-mass, Hydro, Non-Fossil fuel based Co-generation etc.
5. Recently, the Govt. of India has announced the Jawaharlal Nehru National
Solar Mission (JNNSM) under which NTPC Vidyut Vyapar Nigam Ltd. (NVVN) is designated as a Nodal Agency. In order to facilitate solar power generation, a mechanism of bundling solar power with power from the cheaper unallocated quota of NTPC coal based stations and selling this power to distribution utilities at the CERC determined price, has been proposed in the JNNSM. NVVN shall be

entering into a Power Purchase Agreement (PPA) with Solar Power Generation
Project Developers who will be setting up Solar Projects during the next three years i.e. before March 2013 and connected to the grid at voltage level of 33 KV and above. For each MW installed capacity of solar power for which PPA is signed by NVVN, Ministry of Power (MoP) shall allocate to NVVN an equivalent amount of MW capacity from the unallocated quota of NTPC coal based stations and NVVN will supply this bundled power to the distribution utilities. The developers opting to set up Solar Power Projects in Punjab may also adopt the same route.
6. The JNNSM is also to encourage rooftop solar PV and other small solar power plants, connected to LT/11 KV grid, to replace conventional power and diesel-based generators. It is envisaged that distribution utility will pay the tariff determined by the State Electricity Regulatory Commission for the metered electricity generated from such applications (whether consumed by the grid connected owner of the rooftop/ground mounted installation or fed into the grid).
Under the Solar Mission, a normative Generation Based Incentive will be payable to the utility and would be derived as the difference between the solar tariff determined by the CERC for the concerned solar generation technology less an assumed base price of Rs.5.50/kWh with 3% annual escalation. Funds will be disbursed through Indian Renewable Energy Development Agency (IREDA). The tariff for the Solar Power projects not covered under the Generation Based
Incentive (GBI) schemes of the Central Govt. included in paras 5 & 6 above shall be determined by the Commission separately.
7. The RE Regulations enjoins upon the Commission to determine the generic tariff for the RE technologies for which norms have been provided in the regulations. Generic tariff is different from the project specific tariff for which a project developer has to file petition before the Commission as per the format provided in the RE Regulations. Pertinently, project specific tariff has been envisaged under Regulation 7 for the new RE technologies and the technologies

which are still at the nascent stage of development, and the Commission shall determine the project specific tariff for such technologies on a case to case basis.
8. It is brought out that the Commission in its Order dated 13.12.2007, while approving the rates as indicated in GoP NRSE Policy, observed that these rates will be considered the minimum rates that a NRSE developer can claim and observed that it is entirely possible that NRSE projects adopting different technologies and or fuels might need enhanced rates for their encouragement. It was further stated in the Order that, therefore, individual developers were free to approach the Commission for determination of such rates and the Commission will at that stage, decide whether rates are to be approved individually in each case or generically for a category of cases.
9. The Commission has received two petitions from the existing Bio-mass generators for enhancement in tariff rates stating that their projects have become unviable. To uphold the principles of equity, natural justice & fair play and to let the existing RE generating stations remain viable and further to comply with the mandate under section 86(1)(e) wherein the State Commissions are to promote generation of electricity from renewable sources of energy, it is proposed to separately re-determine the tariffs for these petitioners.
10. Keeping in view the provisions in the Tariff Policy, it is proposed that the
Commission may at an appropriate stage consider that procurement of power from new RE projects by distribution licensees for future requirements shall be done, as far as possible, through competitive bidding process under Section 63 of the Act within suppliers offering energy from same type of non-conventional sources. In the long term, these technologies would need to compete with other sources in terms of full costs.
Annexure list