TNERC to hold public hearing for price hike
CHENNAI: Tamil Nadu electricity regulatory commission (TNERC), which decides power tariffs in the state, has called for a public hearing on March
5th, on the long pending issue of purchase price revision for renewable sources of energy, which contribute 11% of the power connected to the state grid. The hearing will involve power generating companies as well as end consumers.
Based on parameters of capital cost, plant load factor or capacity utilization factor, depreciation, peration and maintenance costs, insurance, debt equity ratio, interest rates and return on equity, TNERC has proposed a purchase price of Rs 3.40/kwh (unit) for wind power and Rs 4.660 to Rs 4.866/kwh from the first to third years of installation for biomass. Baggase based co-generated power, called co-gen, has been fixed at Rs 4.802 to Rs 4.493/kwh from first to third year of installation.
The current price paid by the TN electricity board (TNEB) is Rs 2.75-2.90 for wind, and Rs 3.15 for biomass. When the state was strapped for power in Q2 of 2008-09, and raw material prices were on the rise, wind energy producers had demanded a price hike. Biomass power generators followed suit when the price of their raw material – Juliflora, rose by 50%.
While the price revisions had been proposed in a draft in December, they were officialised at the state advisory committee meeting on the 15th of this month.
“TNEB’s 3-year contracts with independent power producers (IPPs) were mostly signed on 15th of May, 2006. Since, price revisions are due coming May anyway, this seemed like a good time for a hearing,” sources in TNERC said. “Moreover, this is also a time to offer incentives for power companies to invest in power in the state.”
However, existing IPPs are not euphoric about the price hike. “The TNERC’s estimation of parameters is unrealistic. They’ve estimated operation costs for biomass at 4.5% of capex, whereas it is actually 7%. The capex itself has been estimated at Rs 5.1 crore, which works for water-cooled condenser plants. For air-cooled condensers that are more economic in the longer run, the capex is Rs 5.5 crore,” said biomass power producers' association secretary Santosh Kamat. The association has demanded a price of Rs 6.80/kwh.
“Despite having an installed capacity of 120 MW, the biomass units output only about 40-50 MW,” said Orient green power MD & CEO P Krishnakumar. “Licenses have been issued for upto 250 MW, but those plants haven’t been commissioned yet because of unfavourable pricing.” His company uses agricultural waste as raw material, thereby saving on raw material costs and providing an extra revenue of 15-20% per acre to the landowner/farmer, but losing out on calorific value.
Also, most biomass power plants work on a 50% capacity utilization, citing raw material unavailability as an issue, whereas TNERC has estimated CUF at 80%. “We have managed to operate our plants at near full capacity by using alternative raw material,” Mr.Krishnakumar said.
As for wind power, the Indian wind turbine manufacturers association (IWTMA), which provides turnkey commissioning solutions and practically operates wind farms, finds the tariff revision satisfactory, and viable for their operation. But, the Indian wind power association, the investor community behind wind farms, feels the tariff hike is not sufficient to attract more investors to the state.
The TNEB will submit its written opinion to the TNERC after the public hearing, after which a decision would be taken on the power purchase prices.
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