RE Tariff regulations

The CERC issued regulations in September 2009 providing guidelines on how feed-in tariff rates for renewable energy projects are to be calculated, for projects that the Commission would set tariffs for. The regulations cover all renewable energy technologies, and are to be reviewed every three years, though the first review will take place in March 2010, while benchmark capital costs for solar PV and solar thermal projects are to be reviewed every year. The tariff will be determined by taking into account the following fixed-cost components:a) return on equity;b) interest on loan capital;c) depreciation;d) interest on working capital;e) operation and maintece expensesThe regulations specify the financial principles or assumptions of each component, some of which are technology specific (e.g. capital costs, interest on working capital). They also allow for project-specific tariffs to be determined for certain types of projects (e.g. municipal solid waste, hybrid solar thermal, certain solar PV and solar thermal), with relevant guidelines. The discount rate used in determining the tariff will be the average weighted cost of capital. The tariffs are defined as the levelised cost of energy, and are derived from the specific useful life of each technology. The feed-in tariff period for most renewable energy technologies is 13 years, extended to 35 years in the case of small hydro (below 5MW) and 25 years for solar PV and solar thermal. The regulations specify the capital and operation and maintece costs per MWh for several technologies: wind, small hydro, solar PV, solar thermal, non-fossil fuel based cogeneration, and biomass-based power projects. Capital costs are adjusted yearly through an indexation mechanism. For wind power, the tariff will also vary based on resource intensity. Four bands of wind power density in watts/m2 give distinct capacity factors to be used in determining the feed-in tariff, as follows:200-250 W/m²: 20%.Levelised Total Tariff FY2011-12 of INR 5.33/kWh - 250-300 W/m²: 23%.Levelised Total Tariff FY2011-12 of INR 4.63/kWh - 300-400 W/m²: 27%.Levelised Total Tariff FY2011-12 of INR 3.95/kWh - > 400 W/m²: 30%.Levelised Total Tariff FY2011-12 of INR 3.55/kWhIn 2009, levellised Total Tariff FY2010-11for Solar power generation have been established as follows: INR 17.91/kWh for solar PV projects whose PPA was signed on or before 31st of March 2011INR 15.31/kWh for Solar Thermal projects whose PPA signed on or before 31st of March 2011 In November 2010, the CERC adjusted levelised Total Tariffs allocated to solar power projects as follows: INR 15.39/kWh for solar PV projects whose PPA was signed after 31st of March 2011 FY 2011-12.INR 15.04/kWh for solar thermal projects whose PPA was signed after 31st of March 2011 FY 2011-12.

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