Chhattisgarh’s Comprehensive Tariff Order for Renewable Energy Projects in FY 2024-25

Introduction

The Chhattisgarh State Electricity Regulatory Commission (CSERC) has taken a significant stride in promoting renewable energy by issuing a comprehensive draft order.[1] This order outlines the general tariff for various renewable energy technologies for the fiscal year 2024-25. The order is not only limited to new projects but also encompasses the existing ones, aiming to create a fair and sustainable renewable energy landscape in the state.

Explanation

The CSERC’s order covers a wide spectrum of renewable energy sources, including:

• Small Hydro Projects: This category encompasses small-scale hydropower projects harnessing the energy of flowing water.
• Non-Fossil Fuel-Based Cogeneration Plants: These plants simultaneously produce electricity and useful heat from sources other than fossil fuels.
• Solar PV Projects: Solar photovoltaic projects ranging from 0.5 MW to 2 MW in capacity are included, promoting solar power generation.
• Biogas-Based Power Projects: Projects utilizing biogas as a fuel source for electricity generation are covered.

Tariff Structure and Components

The CSERC has defined a standard tariff for these technologies for FY 2024-25, effective from the commercial operation date and extending throughout the project’s useful life. The tariff structure includes:

• Fixed Charges: These charges cover the capital costs and return on investment for project developers.
• Energy Charges: These charges are based on the actual energy generated by the project.
• Fuel Cost Component (for Biomass and Biogas): This component is included for technologies utilizing biomass and biogas, ensuring the tariff reflects the fuel costs associated with power generation.

Tariff Determination Norms

The commission has meticulously defined norms for various aspects of tariff determination:

• Capital Costs: Capital costs include expenses related to plant and machinery, civil works, erection and commissioning, financing, interest during construction, and infrastructure up to the connection point. For solar PV projects (0.5 MW to 2 MW), the capital cost is set at ₹4.5 crore per MW. For biogas-based projects, it’s ₹1,186 lakh per MW (net project cost: ₹886 lakh per MW).
• Debt-to-Equity Ratio: The debt-to-equity ratio is set at 70:30, providing a standard for financial structuring.
• Loan Tenure and Interest Rates: A loan tenure of 15 years is considered, with interest rates based on the average State Bank of India Marginal Cost of Funds based Lending Rate plus 200 basis points.
• Depreciation: Depreciation is calculated on a straight-line basis with a rate of 4.67% per annum for the initial 15 years.
• Return on Equity: A return on equity of 16.78% is set for the entire project life, ensuring a fair return for investors.
• Operational and Maintenance Expenses: These expenses are also specified, with annual increases based on a set escalation rate.

Energy Charges for Existing Biomass Power Plants

The CSERC has determined the energy charges for existing biomass power plants for FY 2024-25, ensuring their continued operation and contribution to the state’s renewable energy goals.

Fixed Charges for Biomass Power Plants (2008-09)

In a move to ensure fairness and consistency, the commission has also initiated proceedings to determine fixed charges for biomass power plants that began operations in 2008-09. This aligns with the treatment of plants that started in 2009-10.

Conclusion

The Chhattisgarh State Electricity Regulatory Commission’s comprehensive tariff order for FY 2024-25 demonstrates a strong commitment to promoting renewable energy in the state. By establishing clear, fair, and transparent tariffs, the commission aims to incentivize investments, ensure the financial viability of projects, and foster the growth of renewable energy sources. This initiative is a pivotal step towards a sustainable and greener energy future for Chhattisgarh.

[1] https://cserc.gov.in/upload/upload_news/16-05-2024_1715856958.pdf