Assam Electricity Regulatory Commission Introduces Draft Tariff Regulations 2024 For Renewable Energy

Introduction

The Assam Electricity Regulatory Commission (AERC) has proposed new regulations for tariff determination from renewable energy sources in Assam, India. These regulations, called the Draft AERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources), Regulations 2024, are set to replace the existing 2017 regulations. The primary goal is to promote the generation of electricity from renewable sources like solar, wind, hydro, biomass, and biogas.

Explanation (Key Points)

• Scope and Applicability:
  • These regulations apply to grid-connected renewable energy projects commissioned within a specific control period (July 1, 2024, to March 31, 2027).
  • They cover various renewable energy sources, including wind, small hydro, biomass, solar, and hybrid projects.
  • Projects must meet specific eligibility criteria to qualify for tariff determination under these regulations.
• Tariff Determination:
  • The AERC will determine tariffs, which are the prices at which electricity from renewable sources is sold.
  • There are two types of tariffs:
    • Generic Tariff: Determined annually for specific types of projects (e.g., small hydro, biomass).
    • Project-Specific Tariff: Determined on a case-by-case basis for other project types (e.g., solar, wind).
  • The tariff structure includes components like return on equity, interest on loans, depreciation, and operational expenses.
• Financial Principles:
  • The regulations set norms for capital costs, debt-equity ratios, loan terms, interest rates, and depreciation.
  • These norms help calculate tariffs and ensure fair compensation for project developers.
• Key Definitions:
  • Biomass: Organic waste used for energy production.
  • Capital Cost: The total cost of setting up a renewable energy project.
  • Renewable Energy: Electricity generated from sources like wind, solar, and hydro.
  • Grid Code: Regulations governing the connection of renewable energy projects to the electricity grid.
• Other Important Provisions:
  • The regulations address how to handle excess energy generation (over-generation).
  • They outline rules for late payment surcharges and the treatment of government subsidies or incentives.
  • The AERC has the authority to relax or modify the regulations if needed.

Conclusion

The Draft AERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources), Regulations 2024 are a comprehensive framework designed to encourage renewable energy development in Assam. They provide clear guidelines for tariff calculation, project eligibility, and financial aspects, creating a transparent and predictable environment for investors. These regulations are expected to play a crucial role in increasing the share of renewable energy in Assam’s electricity mix and contributing to a more sustainable energy future.