The generic tariff would be set on a levelized basis for the tariff period from the commercial operation date (COD) of the projects up to the useful life of the projects. The useful life of a small hydro project is considered to be 35 years and 25 years for solar photovoltaic (PV)
January 17, 2020. By Darshana Daga
The Chhattisgarh State Electricity Regulatory Commission (CSERC) has issued draft order announcing generic levelized tariffs for the fiscal year (FY) 2019-20 and 2020-21 for renewable energy sources.
The generic tariff would be set on a levelized basis for the tariff period from the commercial operation date (COD) of the projects up to the useful life of the projects. The useful life of a small hydro project is considered to be 35 years and 25 years for solar photovoltaic (PV).
The capital cost considered here is inclusive of plant and machinery, civil works, erection and commissioning, financing and interest during construction, and evacuation infrastructure up to the interconnection point.
The Commission stated that the capital cost considered for small hydro projects up to 5 MW would be ₹88 million (~$1.2 million)/MW for FY 2019-20 and ₹92.4 million (~$1.3 million)/MW for FY 2020-21.For projects above 5 MW and up to 25 MW, the capital cost will be ₹80 million (~$1.12 million)/MW for FY 2019-20 and ₹84 million (~$1.18 million)/MW for FY 2020-21.
The capital cost of non-fossil fuel-based co-generation projects would be ₹49.25 million (~$694,875)/MW for FY 2019-20 and ₹51.71 million (~$729,584)/MW for FY 2020-21. For the subsequent years, an escalation of 5% would be applicable.
Addressing the capital cost of solar PV power projects, the order noted that the capital cost considered for the financial years 2019-20 and 2020-21 for projects of capacity between 0.5 MW to 2 MW would be ₹45 million (~ $634,912)/MW. For projects above 2 MW and up to 5 MW, the capital cost will be ₹40 million (~$564,366)/MW for FY 2019-20 and 2020-21.
The Commission further observed that for setting the tariff, loan tenure of 13 years had been factored in, and the normative interest rate would be two hundred basis points above the average State Bank of India marginal cost of funds-based lending rate (MCLR) prevalent during the last six months.
For depreciation, the Commission added that the salvage value of the asset would be considered as 10%, and the depreciation would be allowed up to a maximum of 90% of the capital cost of the asset. The depreciation rate for the first 13 years of the tariff period would be 5.28% per annum, and the remaining depreciation would be spread over the useful life of the project.
The Commission noted that the return on equity for the entire useful life of the project comes out to be 20.12% for the financial year 2019-20 and 19.39% for the financial year 2020-21.
The Commission stated that the operation & maintenance (O&M) expenses for the solar project is taken as ₹700,000 (~$9,876)/MW for the financial year 2019-20 and ₹740,000 (~$10,440)/MW for the financial year 2020-21. An increase of 5.72% per annum would be considered after that throughout the tariff period.
The capacity utilization factor (CUF) for small hydro and solar PV projects has been set at 30% and 19%, respectively.
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