MEGHALAYA STATE ELECTRICITY REGULATORY COMMISSION

NOTIFICATION
05th October 2012

MSERC/REG/2012/06 : The following draft of the MSERC (Terms & Conditions of

determination of tariff for generation from renewable energy sources) Regulation
2012, which the Commission proposes to make under section 61& 86 read with
section 181(2)(zd) of the Electricity Act 2003 (36 of 2003) and all other powers
enabling it in this behalf, are hereby previously published as required under section
(3) of section 181 and notice is hereby given that any person or persons who may be
interested may send their objections, suggestion or comments to the Secretary of the
Commission, New Administrative Building, Lower Lachumiere, Shillong within 30
days of this notification in the Gazette of Meghalaya for consideration by the
Commission.
J B Poon
Secretary
Meghalaya State Electricity Regulatory Commission
Shillong

CHAPTER 1: PRELIMINARY
1.

Short title and commencement

1.1 These regulations may be called the Meghalaya State Electricity Regulatory
Commission (Terms and Conditions for determination of Tariff for Generation
from Renewable Energy Sources) Regulations, 2012.
1.2 These regulations shall come into force from the date of their publication in the
Official Gazette of the Government of Meghalaya.

2.

Definitions
2.1 In these regulations, unless the context otherwise requires,
(1)

Act means the Electricity Act, 2003 (36 of 2003);

(2)

Auxiliary energy consumption in relation to a period in case of a

generating station means the quantum of energy consumed by auxiliary
equipment of the generating station, and transformer losses within the
generating station, expressed as a percentage of the sum of gross energy
generated at the generator terminals of all the units of the generating station;

(3)

Banking means the process under which a generating station supplies

power to the grid not with the intention of selling it to either a third party or to a
licensee, but with the intention of exercising its eligibility to draw back this
power from the grid.

(4)

Biomass means wastes produced during agricultural and forestry

operations (for example straws and stalks) or produced as a by-product of
processing operations of agricultural produce (e.g. Husks, shells, de-oiled
cakes etc); wood produced in dedicated energy plantations or recovered from
wild bushes / weeds; and the wood waste produced in some industrial
operations.

(5)

Biomass Gasification means a process of incomplete combustion of

biomass resulting in production of combustible gases consisting of a mixture
of Carbon Monoxide (CO), Hydrogen (H2) and traces of Methane (CH4), which
is called producer gas.

(6)

Biogas means a gas created when organic matter like crop residues,
sewage and manure breaks down in oxygen-free environment (ferments).

(7)

Capital Cost means capital cost as defined under Regulation 16, 28, 32,
38, 51, 61, 66, 71, 81 of these regulations.

(8)

Central Commission or CERC shall mean Central Electricity Regulatory

Commission referred to in sub-section (1) of Section 76 of the Act;

(9)

Capacity Utilisation Factor (CUF) means the total energy sent out
corresponding to generation during the period expressed as a percentage of
energy sent out corresponding to installed capacity in that period
CUF (in %)

E
IC X (100-Aux) X H

107

Where,

(10)

Energy sent out ex-bus in during the period

IC

Installed capacity in MW

Aux

% Normative auxiliary consumption

Number of hours in the period

CERC RE Tariff Regulations shall mean Central Electricity Regulatory

Commission (Terms and Conditions for Tariff determination from Renewable
Energy Sources) Regulations, 2012, as amended from time to time.

(11)

Commission

means

the

Meghalaya

State

Electricity

Regulatory

Commission;

(12)

Control period or Review period means the period during which the
norms for determination of tariff specified in these regulations shall remain
valid.

(13)

Date of Commercial Operation (or) Commissioning in relation to a unit

means the date declared by the generator on achieving maximum continuous
rating through a successful trial run and in relation to the generating station,
the date of commercial operation means the date of commercial operation of
the last unit or block of generating station and expression commissioning
shall be construed accordingly. In case of small hydro plants the date of
commissioning shall, however, not be linked to achieving maximum
continuous rating, but the generator will have to demonstrate the same within
three years of commissioning.

(14)

Existing RE Project means the renewable energy project whose date of

commissioning falls prior to the date of notification of these regulations;

(15)

Gross calorific value or GCV in relation to a fuel used in generating

station means the heat produced in kCal by complete combustion of one
kilogram of solid fuel or one litre of liquid fuel or one standard cubic meter of
gaseous fuel, as the case may be;

(16)

Gross Station Heat Rate means the heat energy input in kcal required to
generate one kWh of electrical energy at generator terminals of a thermal
generating station;

(17)

Hybrid Solar Thermal Power Plant means the solar thermal power plant
that uses other forms of energy input sources along with solar thermal energy
for electricity generation, and wherein not less than 75% of electricity is
generated from solar energy component.

(18)

Installed Capacity' means the summation of the name plate capacities of all
the Units of the generating station or the capacity of the generating station
(reckoned at the generator terminals), approved by the Commission from time
to time;

(19)

Inter-connection Point shall mean interface point of renewable energy

generating facility with the transmission system or distribution system, as the
case may be:
i)

In relation to wind energy projects and Solar Photovoltaic projects, inter

connection point shall be the line isolator on outgoing feeder on HV side
of the pooling sub-station;

Provided the Pooling Sub-station shall mean the sub-station at project site
of the wind farm or solar power plant, as the case may be, and shall
constitute step-up transformer and associated switchgear, and to the LV
side of which, multiple (more than one) generating unit(s) (i.e. wind turbine
generators or solar PV modules/arrays/inverter units) are connected.

ii) In relation to small hydro power, biomass power and non-fossil fuel based
co-generation power projects and Solar Thermal power projects, the interconnection point shall be the line isolator on outgoing feeder on HV side
of generator transformer;
(20)

Integrated Utility means the Meghalaya State Electricity Board, in its

present form or the successor entities performing more than one of the
functions of generation, transmission and distribution after restructuring
thereof ;

(21)

MNRE means the Ministry of New and Renewable Energy of the

Government of India.

(22)

New RE Project means the renewable energy project whose date of

commissioning shall be subsequent to the date of notification of these
regulations;

(23)

Non-fossil fuel based co-generation means the process in which more

than one form of energy (such as steam and electricity) are produced in a
sequential manner by use of biomass, provided the project may qualify to be
a co-generation project if it fulfills the eligibility criteria as specified in
Regulation 4 (2) (d).

(24)

'Operation and Maintenance expenses or O&M expenses' means the

expenditure incurred on operation and maintenance of the project, or part
thereof, and includes the expenditure on manpower, repairs, spares,
consumables, insurance and overheads;

(25)

Open Access Customer means, (a) a consumer permitted by the

Commission to receive supply of electricity from a person other than
distribution licensee of his area of supply, or (b) a generating company
(including captive generating plant), or (c) a licensee who has availed or
intends to avail of Open Access in accordance with the regulations of the
Commission for grant of open access to the transmission lines and the
distribution system of a licensee;

(26)

Open Access Regulations means the regulations notified by the

Commission for grant of open access to the transmission lines and the
distribution system of a licensee;

(27)

'Project' means a generating station or the evacuation system upto interconnection point, as the case may be, and in case of a small hydro
generating station includes all components of generating facility such as dam,
intake water conductor system, power generating station and generating units
of the scheme, as apportioned to power generation;

(28)

Renewable Energy means the grid quality electricity generated from

renewable energy sources.

(29)

Renewable Energy Power Plants means the power plants other than the
conventional power plants generating grid quality electricity from renewable
energy sources.

(30)

Renewable Energy Sources means renewable sources such as small

hydro, wind, solar including its integration with combined cycle, biomass
including bagasse, bio fuel co-generation, urban or municipal waste and such
other sources as approved by the MNRE;

(31)

Small Hydro means Hydro Power projects with a station capacity upto and
including 25 MW.

(32)

Solar PV power means the Solar Photo Voltaic power project that uses
sunlight for direct conversion into electricity through Photo Voltaic technology.

(33)

Solar rooftop PV and other small solar power means the Solar rooftop or
other small solar Photo Voltaic power project that uses Photo Voltaic
technology for generation of electricity, which are mounted on rooftop of
buildings or ground mounted installations, and satisfying any other eligibility
criteria as may be specified by MNRE from time to time.

(34)

Solar Thermal Power means the Solar Thermal power project that uses
sun light for direct conversion into electricity through Concentrated Solar
Power Technology based on either line focus or point focus principle.

(35)

State means the State of Meghalaya;

(36)

Tariff Period means the period for which tariff is to be determined by the
Commission on the basis of norms specified under these regulations.

(37)

Useful Life in relation to a unit of a generating station including evacuation

system shall mean the following duration from the date of commercial
operation (COD) of such generation facility, namely: a) Wind energy power project

25 years

b) Small Hydro Plant

35 years
5

c) Biomass power project with Rankine Cycle Technology 20 years

(38)
2.2

d) Non-fossil fuel co-generation project

20 years

e) Solar PV/Solar thermal power project

25 years

f) Bio mass Gasifier based Power Project

20 years

g) Bio gas based Power Project

20 years

Year means financial year ending on 31st March.

Words and expressions used in these regulations and not defined herein but defined
in the Act or regulations made by the Commission, shall have the meanings assigned
to them respectively in the Act, and regulations made by the Commission from time
to time.

3.

Scope and extent of application

These regulations shall apply in all cases where tariffs, for supply of electricity from
Renewable Energy Sources and Non-fossil Fuel based co-generating stations to the
distribution licensees within the state of Meghalaya, is to be determined by the
Commission under Section 62 read with Section 86 of the Act.
Provided that in cases of wind, small hydro projects, biomass power based on
Rankine cycle, non-fossil fuel based cogeneration projects, solar PV, Solar Thermal
power projects, Biomass gasifier and Biogas power project, these regulations shall
apply subject to the fulfillment of eligibility criteria specified in Regulation 4 of these
regulations.
Provided that in respect of generating stations where directions / orders have been
issued by a higher court, they shall be governed by such directions / orders.

CHAPTER 2: GENERAL CONDITIONS

4.

Eligibility Criteria
(1) For the purposes of these regulations, generation from all types of Renewable
Energy Sources and non-fossil fuel based Co-generating Plants, as approved by
Ministry of New and Renewable Energy (MNRE), Government of India shall be
considered and such generating stations shall be collectively referred to as RE
based Generating Stations.
(2) At present, generation from the following sources and technologies shall qualify
to be covered under these regulations:
(a) Wind Power project using new wind turbine generators
(b) Small hydro Project located at the sites approved by State Nodal Agency /
State Government using new plant and machinery and installed power plant
capacity to be lower than or equal to 25 MW at single location.
(c) Biomass power project based on Rankine Cycle technology - Biomass
power projects using new plant and machinery based on Rankine Cycle
technology and using biomass fuel sources, provided use of fossil fuel is
restricted only to 15% of total fuel consumption on annual basis;
(d) Non-fossil fuel based Co-generation project The project shall qualify to
be termed as a non-fossil fuel based co-generation project, if it is using new
plant and machinery and is in accordance with the definition and also meets
the qualifying requirement outlined below:
Topping cycle mode of co-generation Any facility that uses non-fossil fuel
input for the power generation and also utilizes the thermal energy generated
for useful heat applications in other industrial activities simultaneously.
Provided that for the co-generation facility to qualify under topping cycle
mode, the sum of useful power output and one half the useful thermal output
be greater than 45% of the facilitys energy consumption, during season.
Explanation- For the purpose of this clause,
(i)

Useful power output is the gross electrical output from the generator.
There will be an auxiliary consumption in the cogeneration plant itself
(e.g. the boiler feed pump and the FD/ID fans). In order to compute the
net power output it would be necessary to subtract the auxiliary
consumption from the gross output. For simplicity of calculation, the

useful power output is defined as the gross electricity (kWh) output from
the generator.
(ii)

Useful Thermal Output is the useful heat (steam) that is provided to

the process by the cogeneration facility.

(iii)

Energy Consumption of the facility is the useful energy input that is

supplied by the fuel (normally bagasse or other such biomass fuel).

(iv)

Topping cycle means a cogeneration process in which thermal energy

produces electricity followed by useful heat application in industrial
activities.

(e) Solar PV and Solar Thermal Power Projects Based on Technologies

approved by MNRE.
(f) Biomass Gasifier based Power Project The project shall qualify to be
termed as a biomass gasifier based power project, if it is using new plant and
machinery and having a Grid connected system that uses 100% producer gas
engine, coupled with gasifier technologies approved by MNRE.
(g) Biogas based Power Project The project shall qualify to be termed as a
biogas based power project, if it is using new plant and machinery and having
Grid connected system that uses 100% Biogas fired engine, coupled with
Biogas technology for co-digesting agriculture residues, manure and other bio
waste as may be approved by MNRE.
(3) Any new source or technology would qualify as renewable energy, only after the
Commission has approved the technology based on MNRE approval. Further, the
Commission shall determine tariffs separately for such technology.
5.

Obligations and duties of the Generating Station

(1) RE based Generating Stations shall indicate the capacity of its generating plant in
the Detailed Project Report (DPR) keeping in view the potential of electricity
generation available from such source and its optimal utilization. It shall further be
obliged to submit the DPR, progress of construction and details regarding
commissioning of the generating plant or any other related information to the
Commission in such form and manner as may be required by the Commission.

(2) The RE based Generating Stations shall:

(a) Submit the information in respect to generation, demand met, capacity
availability, capacity utilization factor, auxiliary consumption, specific heat rate
and specific oil consumption or on any other parameters etc. as may be
directed by the Commission.
(b) Shall establish a communication and data transfer system with State Load
Dispatch Centre and Co-ordinate with State Load Dispatch Centre in respect
to:
i)

Scheduling

ii)

Exchange of data of quantity of electricity transmitted through the grid.

iii)

Real time grid operation and dispatch of electricity in accordance with

State Grid Code Regulations.

(3) The RE based Generating Stations shall abide by the grid discipline and install
adequate protection equipment for safety of its system and human life.
(4) The RE based Generating Stations shall ensure the compliance of the State Grid
Code Regulations as amended from time to time.
(5) The RE based Generating Stations shall ensure compliance of any general or
specific direction issued and regulations made by the Commission for the
generating companies.
(6) Power Purchase Agreements signed by the generating stations existing on the
date of notification of these regulations shall be renewed in accordance with
these regulations.
(7) The RE based Generating Stations shall ensure economical use of resources,
good performance and optimum investment at all times and shall endeavor to
achieve the operational parameters as applicable to a particular source of
energy, such as auxiliary consumption, heat rate, fuel consumption, capacity
availability, capacity utilization factor etc. in the case of a non-fossil fuel based cogenerating station, as may be specified/determined by the Commission from time
to time for fixation of tariff for different renewable sources of energy.
(8) The RE based Generating Stations shall coordinate with State Transmission
Utility/Distribution Licensee for the purpose of planning and coordination relating
to intra-state transmission/distribution system as provided under the Act.
(9) The RE based Generating Stations shall pay fee and charges to the State Load
Dispatch Centre as may be specified or directed by the Commission from time to
time.
(10) The RE based Generating Stations shall be under obligation to comply with the
directions issued to it by the State Load Dispatch Centre.
9

6.

Sale of Power
(1) All RE based Generating Stations shall be allowed to sell power, to the
distribution licensee at the rates determined by the Commission or to any
consumer (provided that such consumer has been allowed Open Access under
Open Access Regulations) or to any person within the State or outside the State
at mutually agreed rates provided that such sale outside the State is not in
contravention to any Policy notified by the State Government or to any provision
of any legally enforceable existing agreement signed by generating company with
any person.
(2) The distribution licensee on an offer made by the said RE based Generating
Stations shall enter into a power purchase agreement in conformity with these
regulations and relevant provisions of other Regulations and the Act.
(3) The distribution licensee shall make an application to the Commission for
approval of power purchase agreement entered into with the generating station.

7.

Open Access
(1) Open access in the State Transmission/Distribution System shall be allowed to all
RE based Generating Stations for captive use and to those covered under
Regulation 6 (1), which shall be subject to provisions of these regulations.
(2) Open Access in State Transmission System:
(a) A person, who has established the RE based Generating Station shall have
right to non-discriminatory open access to the State Transmission System for
carrying electricity from his plant by using transmission lines and associated
facilities subject to payment of transmission charges and adjustment of
average Transmission Losses in kind as determined by the Commission in
the relevant tariff orders of the licensees for a particular year.
(b) The open access to the State Transmission System shall be subject to the
availability of surplus transmission capacity as determined by State
Transmission Utility.
(3) Open Access in Distribution System:
(a) For sale of electricity within the State, non-discriminatory open access to the
distribution system shall be available to such RE based Generating Stations
and plants, who have entered into an agreement to sell power to any
consumer within the State or require power for their own captive use.

10

(b) Open access to State Distribution System may also be available to RE based
Generating Station or Co-generating Station for sale of electricity outside the
State provided that the Distribution Licensee is in agreement with above
Generating Station for wheeling such power outside the State through its
system.
(c) The open access to the distribution system shall be subject to payment of
wheeling charges and adjustment of average distribution losses in kind as
determined by the Commission in the relevant tariff orders of the licensees for
a particular year.
(d) The open access to the Distribution System shall be subject to the
availability of surplus distribution capacity in the Distribution System.
(4) If any question arises as to the availability of surplus capacity in the State
transmission system or the State distribution system, the matter shall be
adjudicated and decided by the Commission.

11

CHAPTER 3: TARIFF GENERAL PRINCIPLES

8.

Control Period or Review Period

The Control Period or Review Period under these regulations shall be of three (3)
financial years. First year of the Control Period shall commence from the date of
notification of these regulations to 31st March, 2013.
Provided further that the tariff determined as per these regulations for the RE projects
commissioned during the Control Period, shall continue to be applicable for the entire
duration of the Tariff Period as specified in Regulation 9 below;
Provided also that the revision in regulations for next Control Period shall be notified
separately and in case regulations for the next Control Period are not notified until
commencement of next Control Period, the tariff norms as per these regulations shall
continue to remain applicable until notification of the revised regulations subject to
adjustments as per revised regulations.

9.

Tariff Period
1) The Tariff Period for Renewable Energy power projects except in case of Small
hydro projects below 5 MW, Solar PV, Solar thermal, Biomass Gasifier, Biogas
based power projects shall be for a minimum period of thirteen (13) years.
2) In case of Small hydro projects below 5 MW, the tariff period shall be thirty five
(35) years.
3) In case of Solar PV and Solar thermal power projects, the tariff period shall be
twenty five years (25) years.
4) In case of Biomass, Biomass Gasifier and Biogas based power projects the tariff
period shall be twenty (20) years.
5) Tariff Period under these regulations shall be considered from the date of
commercial operation of the renewable energy generating stations.
6) Tariff determined as per these regulations shall be applicable for Renewable
Energy power projects, only for the duration of the tariff period as stipulated
under Regulations 9 (1), (2), (3), (4) and (5) above.
7) The PPA shall be executed with the distribution licensee for the entire Tariff
Period.

12

10.

Project Specific Tariff

(1) Project specific tariff, on case to case basis, shall be determined by the
Commission for the following types of projects:
(i) Municipal Solid Waste Projects;
(ii) Solar PV and Solar Thermal Power projects, if a project developer opts for
project specific tariff;
Provided that the Commission while determining the project specific tariff for
Solar PV and Solar Thermal shall be guided by the provisions of Chapters 9
& 10 of these regulations.
(iii) Hybrid Solar Thermal Power plants;
(iv) Other hybrid projects such as, renewable-renewable or renewableconventional sources, for which renewable technology is approved by
MNRE;
(v) Biomass project other than that based on Rankine Cycle technology
application with water cooled condenser;
(vi) Any other new renewable energy technologies approved by MNRE; and
(vii) For projects opting to have their tariffs determined on the basis of actual
capital cost and other norms instead of the bench mark normative capital
cost and other norms as specified for different technologies under Chapters
5 to 12.
(2) Determination of project specific tariff for generation of electricity from such
renewable energy sources shall be in accordance with such terms and conditions
as stipulated under relevant Orders of the Commission.
Provided that the financial norms as specified under Chapter-4 of these
regulations, except for capital cost, shall be ceiling norms while determining the
project specific tariff.

11.

Generic Tariff
(1) The Commission will determine the Generic Tariff separately for such renewable
energy technologies indicated in Regulation 4, which the Commission notes there
is scope for development of generation based on such technologies and
renewable sources in the state. On the basis of suo-motu petition at least six
months in advance at the beginning of each year of the Control period, for which
norms have been specified under these regulations.

13

(2) The Generic Tariff would be based on normative parameters as per the norms
specified in these regulations for each type of renewable energy source and the
year of commissioning of the plant.
(3) The tariff determined being normative, no true up of any parameter, including
additional capitalization, for what so ever reasons shall be taken up during the
validity of the tariff; any short fall or gain due to performance or other reasons is
to be borne / retained by the RE based generating stations.
12.

Petition and proceedings for determination of tariff

(1)

The RE based Generating Stations, opting for project specific tariff, shall make
an application for fixation of Project Specific Tariff based on actual Capital cost
and along with such information as the Commission may require from time to
time.
Provided that for the project specific Tariff determination, the RE based
Generating stations shall submit the break-up of Capital cost items along with
the petition.

(2)

A petition for determination of project specific tariff shall be accompanied by

such fee as may be determined by regulations and shall be accompanied by
a) Information in Forms 1.1, 1.2, 2.1 and 2.2 as the case may be, and as
appended to these regulations;
b) Detailed project report outlining technical and operational details, site
specific aspects, premise for capital cost and financing plan, etc.
c) A Statement of all applicable terms and conditions and expected
expenditure for the period for which tariff is to be determined.
d) A statement containing full details of calculation of any subsidy and
incentive received, due or assumed to be due from the Central Government
and/or State Government. This statement shall also include the proposed
tariff calculated without consideration of the subsidy and incentive.
e) Any other information that the Commission requires the Petitioner to submit.

(3)

The proceedings for determination of tariff shall be in accordance with the

Conduct of Business Regulations of the Commission.

14

13.

Tariff Structure
(1) The tariff for sale of energy from renewable energy technologies shall be singlepart tariff (in Rs./kWh) and ex-bus consisting of the following fixed cost
components;
a) Interest on loan capital;
b) Depreciation;
c) Return on equity;
d) Interest on working capital;
e) Operation and maintenance expenses;
Provided that for renewable energy technologies having fuel cost component, like
biomass power projects and non-fossil fuel based co-generation projects, singlepart tariff with two components, viz., fixed cost component and fuel cost
component, shall be determined.

14.

Tariff Design
(1)

The generic tariff shall be determined on levellised basis for the Tariff Period.
Provided that for renewable energy technologies having single-part tariff with
two components, tariff shall be determined on levellised basis considering the
year of commissioning of the project for fixed cost component while the fuel
cost component shall be specified on year of operation basis.

(2)

For the purpose of levellised tariff computation, the discount factor equivalent to
Post Tax weighted average cost of capital shall be considered.

(3)

Levellisation shall be carried out for the useful life of the Renewable Energy
Project, while tariff shall be specified for the period equivalent to Tariff Period.

Levellised Tariff:
Levellised tariff is calculated by carrying out levellisation for useful life of each
technology considering the discount factor for time value of money.
Discount Factor:
The discount factor considered for this purpose is equal to the Post Tax weighted
average cost of the capital on the basis of normative debt : equity ratio (70 : 30)
specified in the Regulations. Considering the normative debt equity ratio and
weighted average of the post tax rates for interest and equity component, the
discount factor is calculated.

15

15.

Applicability of Merit Order for electricity generated from Renewable Energy

Sources

Since RE Sources are dependent on vagaries of nature and are small capacities, the
principle of merit order dispatch/purchase shall not be applicable to supply of power
from such sources to the distribution licensee or local grid within the State, i.e. they
shall be treated as Must Run stations.

16

CHAPTER 4: FINANCIAL PRINCIPLES

16.

Capital Cost
The norms for the bench mark Capital Cost as specified in the subsequent
technology specific chapters shall be inclusive of all capital works like plant and
machinery, civil works, erection & commissioning, financing, interest during
construction and evacuation infrastructure up to inter-connection point.
Provided that the benchmark capital cost for Solar PV and Solar thermal projects
may be reviewed annually by the Commission.
Provided that for project specific tariff determination, the generating company shall
submit the break-up of capital cost items along with its petition in the manner
specified under Regulation 12. The capital cost shall be admitted based on the
scrutiny of capital estimates by the Commission which shall include reasonableness
of capital cost, interest during construction, use of efficient technology and such other
matters relevant for arriving at Capital cost of the project.

17.

Debt - Equity Ratio

(1) For determination of generic tariff based on suo-motu petition, the debt- equity
ratio shall be 70: 30.
(2) For determination of project specific tariff, the following provisions shall apply: If the equity actually deployed is more than 30% of the capital cost, the amount of
equity for the purpose of tariff determination shall be limited to 30% and the
balance equity in excess of 30% shall be treated as normative loan.
Provided that where equity actually deployed is less than 30% of the capital cost,
the actual equity shall be considered for determination of tariff.
Provided further that the equity invested in foreign currency shall be
denominated/ designated in Indian rupees on the date of each investment.
(3) The debt and equity amounts arrived in accordance with the above clauses shall
be used for calculating interest on loan and return on equity.

17

18.

Interest and Finance Charges on Loan Capital

(1) Loan tenure
For the purpose of determination of tariff, loan tenure of 12 years shall be
considered.
(2) Interest Rate
a) The loans arrived at in the manner indicated above in Regulation 17 shall be
considered as gross normative loan for calculation of interest on loan. The
normative loan outstanding as on April 1st of every year shall be worked out
by deducting the cumulative repayment up to March 31st of previous year
from the gross normative loan.
b) For the purpose of computation of tariff, the normative interest rate shall be
considered as average State Bank of India Base Rate prevalent during the
first six months of the previous year plus 150 basis points.
c) Notwithstanding any moratorium period availed by the generating company,
the repayment of loan shall be considered from the first year of commercial
operation of the project and shall be equal to the annual depreciation allowed.

19.

Depreciation
(1) For the purpose of tariff determination, depreciation shall be computed in the
following manner,
(a) The value base for the purpose of depreciation shall be the Capital Cost of the
asset admitted by the Commission.
(b) The salvage value of the asset shall be considered as 10% and depreciation
shall be allowed up to maximum of 90% of the Capital Cost of the asset.
(c) Annual Depreciation shall be based on Differential Depreciation Approach
using Straight Line Method over two distinct periods comprising loan tenure
and period beyond loan tenure over useful life. The depreciation rate for the first
12 years of the Tariff Period shall be 5.83% per annum and the remaining
depreciation shall be spread over the remaining useful life of the project from
13th year onwards.
(d) Depreciation shall be chargeable from the first year of commercial operation.
Provided that in case of commercial operation of the asset for part of the year,
depreciation shall be charged on pro rata basis.

18

(2) Capital subsidy received by the generator shall not be reduced from the capital cost
for depreciation purposes. However, the generator will have to carry out any
renovation or replacement or additional capitalization.
20.

Return on Equity
(1) The value base for the equity shall be 30% of the capital cost for generic tariff
determination or actual equity (in case of project specific tariff determination) as
determined under Regulation 17.
(2) The normative Return on Equity shall be: 16%
Provided that in case of projects commissioned after notification of these regulations
an additional return of 1.0% shall be allowed if such projects are completed within the
timeline approved in the sanctioned Detail Project Report and within the original
sanctioned project cost without cost over run.

21.

Interest on Working Capital

(1) The Working Capital requirement in respect of wind energy projects, small hydro
power, solar PV and Solar thermal power projects shall be computed as under:
a) Operation & Maintenance expenses for one month;
b) Receivables equivalent to 2 (Two) months of energy charges for sale of
electricity calculated on the normative Capacity Utilisation Factor (CUF);
c) Maintenance spare @ 15% of operation and maintenance expenses;
(2) The Working Capital requirement in respect of Biomass and Biogas power
projects, Non-fossil fuel co-generation projects shall be computed as under:
(a) Fuel costs for four months equivalent to normative Plant Load Factor (PLF);
(b) Operation & Maintenance expense for one month;
(c) Receivables equivalent to 2 (Two) months of fixed and variable charges for
sale of electricity calculated on the target PLF;
(d) Maintenance spare @ 15% of operation and maintenance expenses.
(3) Rate of Interest on Working Capital shall be at interest rate equivalent to average
State Bank of India Base Rate prevalent during the first six months of previous
year plus 100 basis points.
(4) The interest on working capital shall be on normative basis not withstanding that
the generating company has not taken working capital loan from any outside
agency.

19

22.

Operation and Maintenance Expenses

(1) Operation and Maintenance or O&M expenses shall comprise the following,
(a) Repair and maintenance (R&M),
(b) Establishment including employee expenses, and
(c) Administrative and general expenses including insurance.
(2) Operation and maintenance expenses shall be determined for the Tariff Period
based on normative O&M expenses specified by the Commission subsequently in
these regulations for the first Year of Control Period.
(3) Normative O&M expenses allowed during first year of the Control Period (i.e. FY
2012-13) under these regulations shall be escalated at the rate of 5.72% per
annum to determine the O&M expenses for different years of the Tariff Period.

23.

Rebate
(1) For payment of bills of the generating company through letter of credit, a rebate
of 2% shall be allowed.
(2) Where payments are made other than through letter of credit within a period of
one month of presentation of bills by the generating company, a rebate of 1%
shall be allowed.

24.

Late payment surcharge

In case the payment of any bill for charges payable under these regulations is
delayed beyond a period of 60 (sixty) days from the date of billing, a late payment
surcharge at the rate of 1.25% per month shall be levied by the generating company.

25.

Sharing of CDM benefits

The proceeds of carbon credit from approved CDM project shall be shared between
generating company and concerned beneficiaries in the following manner, namely(1) 100% of the gross proceeds on account of CDM benefit to be retained by the
project developer in the first year after the date of commercial operation of the
generating station;
(2) In the second year, the share of the beneficiaries shall be 10% which shall be
progressively increased by 10% every year till it reaches 50%, where after the
proceeds shall be shared in equal proportion, by the generating company and the
beneficiaries.
(3) The CDM benefits shall not be considered for determination of levellised or yearly
tariff and total amount of proceeds shall be remitted directly by the generating
company to the distribution licensee for each financial year within one month of
its receipt along with auditors certification in accordance with above provisions.

20

26.

Subsidy or incentive by the Central/State Government

The Commission shall take into consideration any incentive or subsidy offered by the
Central or State Government, including accelerated depreciation benefit if availed by
the generating company, for the renewable energy power plants while determining
the tariff under these Regulations.
Provided that the following principles shall be considered for ascertaining income tax
benefit on account of accelerated depreciation, if availed, for the purpose of tariff
determination:
a) Assessment of benefit shall be based on capital cost admitted, accelerated
depreciation rate as per relevant provisions under Income Tax Act and corporate
income tax rate.
b) Capitalisation of RE projects during second half of the fiscal year.
c) Per unit benefit shall be derived on levellised basis at discount factor equivalent
to Post Tax weighted average cost of capital or any appropriate discounting
factor considered by the Commission.
Provided further that where Central Government or the State Government has
notified any Generation Based Incentive (GBI) Scheme for a particular kind of
renewable technology, the tariffs of such generating stations shall be reduced by the
amount of GBI per unit.

27.

Taxes and Duties

Tariff determined under these regulations shall be exclusive of taxes and duties on
generation and sale of electricity from renewable energy project as may be levied by
the appropriate Government:
Provided that the taxes and duties levied by the appropriate Government on
generation and sale of electricity from renewable energy project shall be allowed as
pass through on actual incurred basis subject to production of documentary evidence
by the generating company.

21

CHAPTER 5: TECHNOLOGY SPECIFIC PARAMETERS FOR WIND ENERGY

PROJECTS
28.

Capital Cost
(1) The Capital Cost for wind energy projects shall include wind turbine generator
including its auxiliaries, land cost, site development charges and other civil works,
transportation charges, evacuation cost upto inter-connection point, financing
charges and interest during construction (IDC).
(2) The normative capital cost for wind energy projects shall be of Rs. 575 lakh / MW
for FY 2012-13 i.e., during the first year of control period and which will be
revised for projects to be commissioned in each subsequent year, linked to
capital cost indexation mechanism as outlined under Regulation 29.

29.

Capital Cost Indexation Mechanism

The indexed Capital Cost in case of wind energy projects for each year of the Control
Period shall be notified pursuant to issuance of such indexed capital cost for wind
energy projects by Central Electricity Regulatory Commission in accordance with
indexation mechanism stipulated under CERC RE Tariff Regulations, 2012.
The indexation mechanism will take into account adjustments in capital cost with the
changes in Whole Sale Price Index (WPI) of Steel and Whole Sale Price Index of
Electrical Machinery.

30.

Capacity Utilization Factor

Capacity utilization factor (CUF), for wind energy projects depends on several factors
such as wind velocity, air density, capacity and performance of machine, age of
machine, height of the hub and length of the blade. Capacity utilization factor is a
vital parameter influencing the viability of a wind energy project at a particular site.
(1) CUF norms for this control period shall be as follows:

Sr. No.
1
2
3
4
5

Annual Mean Wind Power

Density Watt / M2
Upto 200
201 250
251 300
301 400
> 400

CUF
20 %
22 %
25 %
30 %
32 %

22

(2) The annual mean wind power density specified in sub-regulation (1) Sr. No. 1
above shall be measured at 80 metre hub-height.
(3) For the purpose of classification of wind energy project into a particular wind zone
class, as per MNRE guidelines for wind measurement, wind mast either put-up by
Centre for Wind Energy Technology (C-WET) or a private developer and
validated by C-WET would be normally extended 10 km from the mast-point to all
directions for uniform terrain and limited to appropriate distance in complex
terrain with regard to complexity of the site. Based on such validation by C-WET,
State Nodal Agency should certify zoning of the proposed wind farm complex.
31.

Operation and Maintenance Expenses

(1) Normative O&M expenses for the first year of the Control Period (i.e. FY 2012-13)
shall be Rs. 7.26 lakh per MW
(2) Normative O&M expenses allowed under these regulations shall be escalated at
the rate of 5.72% per annum over the tariff period for determination of the
levellised tariff.

23

CHAPTER 6: TECHNOLOGY SPECIFIC PARAMETERS FOR SMALL HYDRO

PROJECTS
32.

Capital Cost
(1) Small Hydro Projects for the purpose of these Regulations cover those projects
which are located at the sites approved by the State Nodal Agency / State
Government using new plant and machinery and with installed power plant
capacity lower than or equal to 25 MW.
(2) The normative capital cost for FY 2012-13 for Small Hydro Projects during first
year of control period shall be as follows:
Size of project
Below 5 MW
5 MW to 25 MW

Capital Cost
(Rs. lakh / MW)
770
700

(3) The capital cost for subsequent years shall be revised for projects to be
commissioned in each subsequent year linked to capital cost indexation formula
as outlined under Regulation 33.
33.

Capital Cost Indexation Mechanism

The indexed capital cost in case of small hydro projects for each year of the control
period shall be notified pursuant to notification of such indexed capital cost for small
hydro projects by Central Electricity Regulatory Commission in accordance with
indexation mechanism stipulated under CERC RE Tariff Regulations, 2012.
The indexation mechanism will take into account adjustments in capital cost with the
changes in Whole Sale Price Index (WPI) of Steel and Whole Sale Price Index of
Electrical Machinery.

34.

Capacity Utilization Factor

The capacity utilization factor would be considered on the basis of CUF of small
hydro projects in the state while approving the tariff. The benchmark capacity
utilization factor for small hydro projects shall be 45%.
The normative CUF shall be net of free power to the home State if any, and any
quantum of free power if committed by the developer over and above the normative
CUF shall not be factored into the tariff.

35.

Auxiliary Consumption
Normative auxiliary consumption for Small hydro projects shall be 1.0 %.

24

36.

Operation and Maintenance Expenses

(1) The normative O&M expenses for small hydro projects for the first year control
period i.e., FY 2012-13 shall be as given below:
Size of project
Below 5 MW
5 MW to 25 MW

O&M Expenses
(Rs. lakh / MW)
23.47
16.77

(2) Normative O&M expenses allowed under these regulations shall be escalated at
the rate of 5.72 % per annum for the tariff period for the purpose of determination
of levellised tariff.

25

CHAPTER 7: TECHNOLOGY SPECIFIC PARAMETERS FOR BIOMASS POWER

PROJECTS
37.

Technology Aspect
Biomass power project for the purpose of these Regulations covers the projects
using new plant and machinery based on Rankine cycle technology application using
water cooled condenser and biomass fuel sources where use of fossil fuel is limited
to the extent of 15% total fuel consumption on annual basis.
The norms for tariff determination specified here under are for biomass power
projects based on Rankine Cycle technology application using water cooled
condensers.

38.

Capital Cost
The normative capital cost for the biomass power projects, based on Rankine Cycle
shall be Rs. 426 lakh / MW for FY 2012-13 during first year of control period and shall
be linked to capital cost indexation as outlined in Regulation 39.

39.

Capital Cost Indexation Mechanism

The indexed capital cost in case of Biomass Power Projects for each year of the
control period shall be notified pursuant to notification of such indexed capital cost for
Biomass Power Projects by Central Electricity Regulatory Commission in accordance
with indexation mechanism stipulated under CERC RE Tariff Regulations, 2012.
The indexation mechanism will take into account adjustments in capital cost with the
changes in Whole Sale Price Index (WPI) of Steel and Whole Sale Price Index of
Electrical Machinery.

40.

Plant Load Factor

1)

Threshold Plant Load Factor for determining fixed charge component of Tariff
shall be:
a) During Stabilization

: 60%

b) During the remaining period of the first year

(after stabilization)
nd

c) From 2 Year onwards

2)

: 70%
: 80 %

The stabilization period shall not be more than 6 months from the date of
commissioning of the project.

26

41.

Auxiliary Consumption
The auxiliary power consumption factor shall be 10% for the determination of tariff.

42

Station Heat Rate

The Station Heat Rate for biomass power projects will be 3800 kcal/kWh.

43.

Operation and Maintenance Expenses

(1) The normative Operation & Maintenance (O&M) expenses for the first year of the
Control Period (i.e., FY 2012-13) shall be Rs.22.63 lakh per MW.
(2) Normative O&M expenses allowed at the commencement of the Control Period
(i.e., FY 2012-13) under these regulations shall be escalated at the rate of 5.72%
per annum over the tariff period for determination of the levellised tariff.

44.

Fuel Mix
(1) The biomass power plant shall be designed in such a way that it uses different
types of non-fossil fuels available within the vicinity of biomass power project
such as crop residues, agro-industrial residues, forest residues, etc., and other
biomass fuels as may be approved by MNRE.
(2) The biomass power generating Companies shall ensure fuel management plan to
ensure adequate availability of fuel to meet the respective project requirements.

45.

Use of Fossil Fuel

The use of fossil fuels shall be limited to the extent of 15% of total fuel consumption
on annual basis or as amended by MNRE from time to time.

46.

Monitoring Mechanism for the use of fossil fuel

1) The project developer shall furnish a monthly fuel procurement statement and
monthly fuel usage statement duly certified by Chartered Accountant to the
beneficiary, with whom the power purchase agreement has been made (with a
copy to appropriate agency appointed by the Commission for the purpose of
monitoring the fossil and non-fossil fuel consumption) for each month, along with
the monthly energy bill. The statement shall cover details such as;
a) Quantity of fuel (in tonnes) for each fuel type (biomass fuels and fossil fuels)
procured and consumed during the month for power generation purposes,

27

b) Cumulative quantity (in tonnes) of each fuel type procured and consumed till
the end of that month during the year,
c) Actual (gross and net) energy generation (denominated in kWh) during the
month,
d) Cumulative actual (gross and net) energy generation (denominated in kWh)
until the end of that month during the year,
e) Opening fuel stock quantity (in tonnes),
f)

Receipt of fuel quantity (in tonnes) at the power plant site and

g) Closing fuel stock quantity (in tonnes) for each fuel type (biomass fuels and
fossil fuels) available at the power plant site.
2) Non-compliance with the condition of fossil fuel usage by the project developer,
during any financial year, shall result in withdrawal of applicability of tariff as per
these Regulations for such biomass based power project.
47.

Calorific Value
The benchmark norm for Calorific Value of the biomass fuel(s) used for the purpose
of determination of tariff for new biomass power projects shall be 3467 kcal/kg.

48.

Fuel Cost
The benchmark norm for Biomass fuel price shall be 2018 Rs./MT during first year of
the Control Period i.e., FY 2012-13 and thereafter shall be linked to indexation
mechanism as specified under Regulation 49 in case developer wishes to opt for
indexing mechanism.
Alternatively, for each subsequent year of Tariff period, the normative escalation
factor of 5% per annum shall be applicable at the option of the biomass project
developer.

49.

Fuel Price Indexation Mechanism

The indexed Biomass fuel price in case of biomass power projects for each year of
the control period shall be notified, pursuant to notification of such indexed Biomass
fuel price norms as applicable for biomass power projects, by Central Electricity
Regulatory Commission in accordance with indexation mechanism stipulated under
CERC RE Tariff Regulations, 2012.

28

CHAPTER 8: TECHNOLOGY SPECIFIC PARAMETERS FOR NON-FOSSIL

FUEL BASED COGENERATION PROJECTS

50.

Technology Aspect
Non-fossil fuel based co-generation has been defined as the process in which more
than one form of energy is produced in a sequential manner by using biomass.
A project shall qualify as a non-fossil fuel based co-generation project, if it is in
accordance with the eligibility criteria as specified under Regulation 4(2)(d).

51.

Capital Cost
The normative capital cost for the non-fossil fuel based cogeneration projects shall
be Rs. 420 lakh / MW for the first year of control period (i.e., FY 2012-13) and shall
be linked to indexation formula as outlined under Regulation 52.

52.

Capital Cost Indexation Mechanism

The indexed capital cost in case of non fossil fuel based cogeneration projects for
each year of the control period shall be notified pursuant to notification of such
indexed capital cost for non-fossil fuel based cogeneration projects by Central
Electricity Regulatory Commission in accordance with indexation mechanism
stipulated under CERC RE Tariff Regulations, 2012.
The indexation mechanism will take into account adjustments in capital cost with the
changes in Whole Sale Price Index (WPI) of Steel and Whole Sale Price Index of
Electrical Machinery.

53.

Plant Load Factor

1) For the purpose of determining fixed charge, the plant load factor for non-fossil
fuel based co-generation projects shall be computed on the basis of plant
availability for number of operating days considering operations during crushing
season and off-season as specified under clause (2) below and load factor of
92%.

2) The number of operating days shall be 150 days (crushing)+ 60 days (off-season)
= 210 days operating days and the plant load factor shall be 53%.

29

3) The PLF for other operating days would be under:

Operating Days
120 days (crushing)+ 60 days (off-season) = 180 days
operating days
180 days (crushing)+ 60 days (off-season) = 240 days
operating days
54.

Plant Load Factor (%)

45 %
60%

Auxiliary Consumption
The auxiliary power consumption factor shall be 8.5% for computation of tariff.

55.

Station Heat Rate

The benchmark norm Station Heat Rate of 3600 kcal/kWh for power generation
component alone shall be considered for computation of tariff for non-fossil fuel
based co-generation projects.

56.

Calorific Value
The Gross Calorific Value for bagasse shall be considered as 2250 kcal/kg. For the
use of biomass fuels other than bagasse, calorific value as specified under
Regulation 47 i.e., 3467 kCal/Kg shall be applicable.

57.

Fuel Cost
(1) The price of bagasse shall be Rs. 1583 / M.Ton and shall be linked to indexation
formulae as outlined under Regulation 58 in case the developer wishes to opt for
indexing mechanism.
Alternatively, for each subsequent year of the control period, the normative
escalation factor of 5% per annum shall be applicable at the option of the project
developer.
(2) For use of biomass other than bagasse in co-generation projects, the biomass
prices as specified under Regulation 48 shall be applicable.

58.

Fuel Price Indexation Mechanism

The indexed Biogas fuel price in case of non-fossil fuel based co-generation projects
for each year of the control period shall be notified, pursuant to notification of such
indexed Biogas fuel price norms as applicable for non-fossil based co-generation
projects, by Central Electricity Regulatory Commission in accordance with indexation
mechanism stipulated under CERC- RE Tariff Regulations, 2012.
30

59.

Operation and Maintenance Expenses

(1) The normative O&M expenses during first year of the Control Period (i.e., FY
2012-13 shall be Rs. 16 lakh per MW).
(2) Normative O&M expenses allowed at the commencement of the Control Period
(i.e. FY 2012-13) under these regulations shall be escalated at the rate of 5.72%
per annum over the tariff period for determination of the levellised tariff.

31

CHAPTER 9: TECHNOLOGY SPECIFIC PARAMETERS FOR SOLAR PV POWER

PROJECTS

60.

Technology Aspect
Norms for Solar Photovoltaic (PV) Power under these regulations shall be applicable
to PV systems that directly convert solar energy into electricity through Photo Voltaic
Technology using Crystalline, Silicon or Thin Film technology or any other technology
as approved by MNRE and are connected to the grid.

61.

Capital Cost
The Normative Capital Cost for setting up Solar photovoltaic Power Project shall be
Rs. 1000 lakh/MW for FY 2012-13.
Provided that the Commission may deviate from above norm in case of project
specific tariff determination in pursuance of Regulation 10 and Regulation 11.

62.

Capacity Utilization Factor

The Capacity utilization factor for Solar Power Project shall be 19% provided that the
Commission may deviate from the above norm in case of project specific tariff
determination in pursuance of Regulations 10 and 11.

63.

Operation and Maintenance Expenses

The O&M expenses at Rs. 11.0 lakh / MW for the first year of operation of the control
period which shall be escalated at the rate of 5.72 % per annum over the tariff period
for determination of the levellised tariff.

64.

Tariff for solar roof PV and other small solar power.

Tariff for Solar rooftop PV and other small solar power projects, complying with
eligibility criteria as may be specified by MNRE from time to time, shall be higher by
Rs 0.50/kWh or such other higher amount as may be stipulated by Commission from
time to time, over and above the tariff applicable for Solar PV power projects as
outlined under Regulation 61, 62 and 63.
Provided that such tariff shall be applicable for solar generation including such solar
generation used for captive consumption, subject to compliance of related terms and
conditions as may be specified by MNRE from time to time.

32

CHAPTER 10: TECHNOLOGY SPECIFIC PARAMETERS FOR SOLAR THERMAL

POWER PROJECTS

65.

Technology Aspect
Norms of Solar thermal power projects under these regulations shall be applicable for
concentrated solar power (CSP) technologies with line focusing or point focusing as
may be approved by MNRE and which uses direct sunlight, concentrating it several
times to reach higher energy densities and thus higher temperatures whereby the
heat generated is used to operate a conventional power cycle to generate electricity
and are connected to the grid.

66.

Capital Cost
The Normative Capital Cost for setting up Solar Thermal Power Project shall be
Rs. 1300 lakh/MW for FY 2012-13.
Provided that the Commission may deviate from above norm in case of project
specific tariff determination in pursuance of Regulations 10 and 11.

67.

Capacity Utilization Factor

The capacity utilization factor shall be 23% to solar thermal power projects.
Provided that the Commission may deviate from above norm in case of project
specific tariff determination in pursuance of Regulations 10 and 11.

68.

Operation and Maintenance Expenses

The O&M expenses shall be Rs. 15.0 lakh / MW for the first year of operation which
shall be escalated of the rate of 5.72 % per annum over the tariff period for
determination of the levellised tariff.

69.

Auxiliary Consumption
The auxiliary consumption shall be 10%.
Provided that the Commission may deviate from above norm in case of project
specific tariff determination in pursuance of Regulations 10 and 11.

33

CHAPTER 11: TECHNOLOGY SPECIFIC PARAMETERS FOR BIOMASS GASIFIER

POWER PROJECTS
70.

Technology Aspect
The

norms for

tariff determination specified hereunder are for grid connected

biomass gasifier based power projects.

A project shall qualify as a biomass gasifier based project, if it is in accordance with
the eligibility criteria as specified under Regulation 4 (2) (f).
71.

Capital Cost
The normative capital cost for the biomass gasifier power projects based on Rankine
cycle shall be Rs. 550 Lakh/MW (FY 2012-13 during first year of Control Period) and
shall be linked to indexation formula as outlined under Regulation 72. Net project
cost shall be reduced taking into account of capital subsidy.

72.

Capital Cost Indexation Mechanism

The indexed capital cost in case of Biomass Gasifier power projects for each year of
the control period shall be notified pursuant to notification of such indexed capital
cost for Biomass Gasifier projects by CERC in accordance with indexation
mechanism stipulated under CERC RE Tariff Regulations, 2012.
The indexation mechanism will take into account adjustments in capital cost with the
changes in Whole Sale Price Index (WPI) of Steel and Whole Sale Price Index of
Electrical Machinery.

73.

Plant Load Factor

Threshold Plant Load Factor for determining fixed charge component of Tariff shall
be 85%.

74.

Auxiliary Consumption
The auxiliary power consumption factor shall be 10% for the determination of tariff.

75.

Specific fuel Consumption

Normative specific fuel consumption shall be 1.25 kg per kWh.

34

76.

Operation and Maintenance Expenses

(1) Normative O&M expenses for the first year of the Control period (i.e. FY 2012-13
shall be Rs. 40 lakh/MW
(2) Normative O&M expenses allowed at the commencement of the Control Period
(i.e. FY 2012-13) under these Regulations shall be escalated at the rate of 5.72%
per annum over the tariff period for determination of the levellised tariff.

77.

Fuel Mix
(1) The Biomass Gasifier based power plant shall be designed in such a way that it
uses different types of non-fossil fuels available within the vicinity of biomass
power project such as crop residues, agro-industrial residues, forest residues
etc. and other biomass fuels as may be approved by MNRE.
(2) The Biomass Gasified based Power Generating Companies shall ensure fuel
management plan to ensure adequate availability of fuel to meet the respective
project requirements.

78.

Fuel Cost
Biomass fuel price during first year of the Control Period (i.e. FY 2012-13) shall be as
per Regulation 48 and shall be linked to indexation formula as specified under
Regulation 79.
Alternatively, for each subsequent year of the Tariff Period, the normative escalation
factor of 5% per annum shall be applicable at the option of the Biomass Gasifier
project developer.

79.

Fuel Price Indexation Mechanism

The indexed Biomass fuel price in case of biomass gasifier power projects for each
year of the control period shall be notified, pursuant to notification of such indexed
Biomass fuel price norms as applicable for biomass gasifier power projects by,
Central Electricity Regulatory Commission in accordance with indexation mechanism
stipulated under CERC RE Tariff Regulations, 2012.

35

CHAPTER 12: TECHNOLOGY SPECIFIC PARAMETERS FOR BIOGAS BASED

POWER PROJECTS
80.

Technology Aspect
The norms for tariff determination specified here under are for grid connected biogas
based power projects that uses 100% Biogas fired engine, coupled with Biogas
technology for co-digesting agriculture residues, manure and other bio waste as may
be approved by MNRE.

81.

Capital Cost
The normative capital cost for the biogas based power shall be Rs. 1100 lakh/MW
(FY 2012-13 during first year of Control Period) and shall be linked to indexation
formula as outlined under Regulation 82. Net project cost shall be reduced by taking
into account of capital subsidy.

82.

Capital Cost Indexation Mechanism

The indexed capital cost in case of Biomass based power projects for each year of
the control period shall be notified pursuant to notification of such indexed capital
cost for Biogas based projects by CERC in accordance with indexation mechanism
stipulated under CERC RE Tariff Regulations, 2012.
The indexation mechanism will take into account adjustments in capital cost with the
changes in Whole Sale Price Index (WPI) of Steel and Whole Sale Price Index of
Electrical Machinery.

83.

Plant Load Factor

Threshold Plant Load Factor for determining fixed charge component of Tariff shall
be 90%.

84.

Auxiliary Consumption
The auxiliary power consumption factor shall be 12% for the determination of tariff.

85.

Operation and Maintenance Expenses

(1) Normative O&M expenses for the first year of the Control period (i.e. FY 2012-13
shall be Rs. 40 lakh/MW

36

(2) Normative O&M expenses allowed at the commencement of the Control Period
(i.e. FY 2012-13) under these regulations shall be escalated at the rate of 5.72%
per annum over the tariff period for determination of the levellised tariff.
86.

Specific Fuel Consumption

Normative specific fuel consumption shall be 3 kg of substrate mix per kWh.

87.

Fuel Cost (Feed stock price)

Feed stock price during first year of the Control Period (i.e. FY 2012-13) shall be
Rs. 990/MT for FY 2012-13 (net of any cost recovery from digester effluent) and shall
be linked to indexation formula as outlined in Regulation 88.

88.

Fuel Price Indexation Mechanism

The indexed fuel price (Feed stock price) in case of biogas based power projects for
each year of the control period shall be notified, pursuant to notification of such
indexed fuel price norms as applicable for biogas based power projects, by Central
Electricity Regulatory Commission in accordance with indexation mechanism
stipulated under CERC RE Tariff Regulation, 2012.

37

CHAPTER 13: MISCELLANEOUS

89.

Deviation from Norms

Tariff for sale of electricity generated from a generating station based on renewable
energy sources, may also be determined, in deviation from the norms specified in
these regulations subject to the conditions that the levellised tariff over the useful life
of the project on the basis of the norms in deviation does not exceed the levellised
tariff calculated on the basis of the norms specified in these regulations.
Provided that the reasons for deviation from the norms specified under these
regulations shall be recorded in writing.

90.

Power to Relax
The Commission may by general or special order, for reasons to be recorded in
writing, and after giving an opportunity of hearing to the parties likely to be affected
may relax any of the provisions of these regulations on its own motion or on an
application made before it by an interested person.

91.

Power to Amend
The Commission may, at any time, vary, alter, modify or amend any provisions of
these regulations on its own or on any application made before it by an interested
person.

92.

Power to Remove Difficulties

If any difficulty arises in giving effect to these regulations, the Commission may, of its
own motion or otherwise, by an order and after giving a reasonable opportunity to
those likely to be affected by such order, make such provisions, not inconsistent with
these regulations, as may appear to be necessary for removing difficulty.

38

Annexures
Form - 1.1
Form Template for (Wind Power or Small Hydro Project or Solar PV / Solar thermal):
Parameter Assumptions
(Refer: Regulation 12)
Sr. Assumption
Sub-Head (1)
No.
Head
1 Power
Capacity
Generation

Project Cost

Capital Cost

Sub-Head (2)
Installed Power Generation
Capacity
Capacity Utilization Factor

MW
%

Commercial Operation Date

mm / yyyy

Useful Life

Years

Normative capital cost

Capital Cost

Rs. lakh / MW
Rs. lakh
Rs. lakh

Capital Subsidy, if any

3

Financial
Assumptions

Debt Equity

Unit

Net Capital Cost

Tariff Period

Rs. lakh

Debt
Equity
Total Debt Amount

%
%
Rs. lakh

Total Equity Amount

Rs. lakh

Loan Amount

Rs. lakh

Moratorium Period
Repayment Period (include
Moratorium)
Interest Rate

Years

Parameter
Values

Years

Debt Component

Years
%

Equity Component
Equity amount
Return on Equity for First 10
years
Return on Equity 11th year
onwards

Rs. lakh
% P.a

Discount Rate

% P.a

Depreciation

Incentives

Depreciation Rate for first 12

years
%
Depreciation Rate 13th year
onwards
%
Generation Based incentives,
if any
Rs. lakh P.a
Period for GBI

Operation &
Maintenance

Working
Capital

Years

Normative O&M Expenses

O&M Expenses per annum

Rs. lakh / MW
Rs. lakh

Escalation factor for O&M Expenses

O&M Expenses
Maintenance Spare
(% of O&M expenses)

Months
%

Receivables
Interest on Working Capital

Months
% P.a

39

Form 1.2
Form Template for (Wind Power or Small Hydro Project or Solar PV / Solar thermal): Parameter Assumptions
(Refer: Regulation 12)
Yr-4
Yr-5
Yr-6

Units Generation
Installed Capacity
Net Generation

Unit
MW
MU

Yr-1

Yr-2

Yr-3

Yr-7

Yr-8

Yr-9

Yr-10

Yr-11

Yr-12

Yr-13

Yr-14

Tariff Components
(Fixed Charge)
O&M Expenses
Depreciation
Interest on term loan
Interest on Working Capital
Return on Equity
Total Fixed Cost

Unit
Rs. Lakh
Rs. Lakh
Rs. Lakh
Rs. Lakh
Rs. Lakh
Rs. Lakh

Yr-1

Yr-2

Yr-3

Yr-4

Yr-5

Yr-6

Yr-7

Yr-8

Yr-9

Yr-10

Yr-11

Yr-12

Yr-13

Yr-14

Per Unit Tariff Components

PU O&M Expenses
PU Depreciation
PU Interest on term loan
PU Interest on working capital
PU Return on Equity
PU Tariff Components

Unit
Rs / kWH
Rs / kWH
Rs / kWH
Rs / kWH
Rs / kWH
Rs / kWH

Yr-1

Yr-2

Yr-3

Yr-4

Yr-5

Yr-6

Yr-7

Yr-8

Yr-9

Yr-10

Yr-11

Yr-12

Yr-13

Yr-14

Levellised Tariff
Unit
Discount Factors
Discounted Tariff Components Rs / kWH
Levellised Tariff
Rs / kWH

Yr-1

Yr-2

Yr-3

Yr-4

Yr-5

Yr-6

Yr-7

Yr-8

Yr-9

Yr-10

Yr-11

Yr-12

Yr-13

Yr-14

40

Form 2.1
Form Template for Biomass Power or Non-fossil fuel based Cogen: Parameter
Assumptions
(Refer: Regulation 12)
Sr.
No.
1

Assumption
Head
Power Generation

Sub-Head (1)
Capacity

Sub-Head (2)
Installed Power Generation
Capacity

Unit

Parameter
Values

MW

Auxiliary Consumption factor %

PLF (during stabilization upto 6
months)
%
st
PLF (during 1 year
stabilization)
%
PLF (2

Project Cost

Financial
Assumptions

Capital Cost

Debt Equity

nd

yr onwards)

Commercial Operation Date

mm/yyyy

Useful Life

Years

Normative Capital Cost

Rs. lakh / MW

Capital Cost
Capital Subsidy, if any

Rs. lakh
Rs. lakh

Net Capital Cost

Rs. lakh

Tariff Period

Years

Debt

Equity
Total Debt Amount

%
Rs. lakh

Total Equity Amount

Rs. lakh

Loan Amount
Moratorium Period
Repayment Period
(including Moratorium)

Rs. lakh
Years

Interest Rate

Equity amount
Return on Equity for First 10
years
Return on Equity 11th year
onwards

Rs. lakh
% P.a

Discount Rate

Debt Component

Years

Equity Component

% P.a

Depreciation

Incentives

Operation &
Maintenance

Depreciation Rate for first 12

years
Depreciation Rate 13th year
onwards
Generation Based incentives,
if any
Period for GBI

Normative O&M Expenses

%
%
Rs. lakh P.a
Years
Rs. lakh / MW

O&M Expenses per annum

Rs. lakh

Escalation factor for O&M Expenses

Contd

41

Contd
5

Working Capital

Fuel related
assumptions

O&M Expenses

Months

Maintenance Spare (% of O&M expenses)

Receivables

%
Months

Interest on Working Capital

Station Heat Rate
During stabilization

Kcal/kWH

Fuel types & mix

% P.a

Post stabilization

Kcal/kWH

Biomass fuel type 1

Biomass fuel type 2

Fossil Fuel (coal)

GCV of Biomass fuel type-1 KCal / kg

GCV of Biomass fuel type-2 KCal / kg
GCV of fossil Fuel (coal)
KCal / kg
Biomass price (fuel type-1):
Yr-1
Rs / MT
Biomass price (fuel type-2):
Yr-1
Rs / MT
Fossil Fuel price (Coal): Yr-1 Rs / MT
Fuel price escalation factor

% P.a

42

Form 2.2
Form Template for Biomass Power or Non-fossil fuel based Cogen: Parameter Assumptions
Units Generation
Installed Capacity
Net Generation

Unit
MW
MU

Tariff Components
(Fixed Charge)
O&M Expenses
Depreciation
Interest on term loan
Interest on Working Capital
Return on Equity
Total Fixed Cost

Unit
Rs. Lakh
Rs. Lakh
Rs. Lakh
Rs. Lakh
Rs. Lakh
Rs. Lakh

Tariff Components
(Variable charge)
Biomass fuel type 1
Biomass fuel type 2
Fossil fuel (coal)
Sub-total (Fuel Costs)
Fuel cost allocable to power
Total Fuel Costs

Unit
Rs. Lakh
Rs. Lakh
Rs. Lakh
Rs. Lakh
%
Rs. Lakh

Yr-1

Yr-1

Yr-1

Yr-2

Yr-3

Yr-2

Yr-3

Yr-2

Yr-3

(Refer: Regulation 12)

Yr-4 Yr-5
Yr-6

Yr-4

Yr-7

Yr-8

Yr-9

Yr-5

Yr-6

Yr-7

Yr-8

Yr-9

Yr-4 Yr-5

Yr-6

Yr-7

Yr-8

Yr-9

Yr-10

Yr-10

Yr-10

Yr-11

Yr-11

Yr-11

Yr-12

Yr-13

Yr-12

Yr-13

Yr 12

Yr-13

Contd..

43

Contd.
Per Unit Tariff Components
(fixed)
PU O&M Expenses
PU Depreciation
PU Interest on term loan
PU Interest on working capital
PU Return on Equity
PU Tariff Components
(fixed)
PU Tariff Components
(Variable)
PU Tariff Components
(Total)
Levellised Tariff
Discount Factors
Discounted Tariff Components
(Fixed)
Discounted Tariff Components
(Variable)
Discounted Tariff Components
(Total)
Levellised Tariff (fixed)
Levellised Tariff (Variable)
Levellised Tariff (Total)

Unit
Rs / kWH
Rs / kWH
Rs / kWH
Rs / kWH
Rs / kWH

Yr-1

Yr-2

Yr-3

Yr-4

Yr-5

Yr-6

Yr-7

Yr-8

Yr-9

Yr-10

Yr-11

Yr-12

Yr-13

Yr-1

Yr-2

Yr-3

Yr-4

Yr-5

Yr-6

Yr-7

Yr-8

Yr-9

Yr-10

Yr-11

Yr-12

Yr-13

Rs / kWH
Rs / kWH
Rs / kWH
Unit

Rs / kWH
Rs / kWH
Rs / kWH
Rs / kWH
Rs / kWH
Rs / kWH

44