WEGs move to Court against RRF Mechanism

Wind energy generators (WEGs) of our nation have recently moved Delhi High Court against the central regulator (CERC) for implementation of RRF mechanism; under which the generators are required to participate in scheduling and forecasting of their power generation on a day-ahead basis. Under the renewable regulatory fund (RRF) mechanism, a generator whose schedule deviates from the forecast over the range of -30 % to +30 % will have to face financial penalties based on system frequency. The schedule to be submitted will be for every 15 minutes i.e. for a total of 96 time blocks during a particular day. For more information on the RRF mechanism, click here.

The Hon’ble CERC in an effort to improve grid operation and to enhance integration of renewable power in the grid, had finally mandated the mechanism to be effective from 15th July 2013; followed by prior deferments on two occasions. WEGs assert and fear that being in a range +- 30 % will be a daunting task and will mulct close to 12-15 % of their profits as reported in an article of  The Hindu. The petition is filled by Wind Independent Power Producers Association (WIPPA) and the association has asked for more time. Although they agree to submit the forecasts and schedules on a daily basis, devoid of any penalty mechanism in place.

With RRF mechanism already in effect since 15th July 2013, with a hand-full of participants only, it will be interesting to analyse the after-effects once the Regional Power Committees (RPCs) come out with energy accounting statements for the very first week.

For more details on the mechanism and relevant services provided by us, you may refer to our monthly newsletter “OPEN ACCESS Vol. 32″.

MP introduces new tariff for wind and bagasse based cogen plants

Hon’ble MPERC recently unveiled its wind tariff order 2013 for procurement of power from wind energy generators. For new wind projects commissioned after 26.03.2013, the tariff has been set as Rs. 5.92 per unit. The commission has considered Rs. 596 lakhs per MW (including cost of power evacuation) and capacity utilization factor of 20% for tariff determination. Other important parameters considered are as under:

MPERC’s previous wind tariff order available dates back in the year 2010 when a tariff of Rs. 4.35 per unit was finalised. This implies that there has been increase of 36.09 % in this year’s tariff. The distribution company in whose area the energy is consumed has been ordered to deduct 2 % of the energy injected towards wheeling charges for third party sale/captive consumption.

Given the fact that Govt. of India has considered reintroduction of Generation Based Incentive for WEGs in its Budget for FY14, the wind power generation business in the state seems lucrative. The APPC + REC module, on the contrary, has limited encouragement for WEGs wanting to participate in the REC Markets considering the fact that RECs have been trading at floor prices (see March 2013 Trading Report) and the APPC in the state is around Rs. 2.47 per unit. This sums up the net realization for WEGs to be around 3.97 Rs per unit which is indeed 33% less than what preferential tariff has to offer.

MPERC also came up with new tariff for bagasse based cogeneration plants in Madhya Pradesh. The tariff for new plants to be commissioned on or after 01.04.2013 has been determined as Rs. 6.28 per unit for a project life of 20 years.

The important parameters considered for tariff determination are provided in the table below:

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