Generator's Tariff Approval Request for a 25 MW Geothermal Project Rejected

The Telangana State Electricity Regulatory Commission (TSERC), in a recent order, rejected a geothermal generator’s plea for tariff approval to supply electricity from a 25 MW geothermal project stating it was too high.

The generator had requested the Commission to approve a tariff of ₹8.86 (~$0.02)/kWh for the first and second year of the control period and ₹8.75 (~$0.01)/kWh for the third year.

The Commission said that the Northern Power Distribution Company of Telangana (TSNPDCL) was not inclined to procure power at such high costs. The Commission further said that the status of the project was not clear. TSERC added that geothermal was a new technology and a renewable energy source, but the petitioner had not made a case because of lack of representation.

Geo Syndicate Power had filed a petition to approve the tariff to supply geothermal energy from a 25 MW project located in the Khammam district of Telangana.


Background

Geo Syndicate Power had proposed to set up a 25 MW geothermal-based power project in the Khammam district. The Non-Conventional Energy Development Corporation of Andhra Pradesh (NREDCAP), currently Telangana State Renewable Energy Development Corporation (TSREDCO), had approved the proposed project, and a memorandum of understanding was signed on March 15, 2010, between the NREDCAP and the generator.

Later, a draft power purchase agreement (PPA) was signed on August 24, 2010. The generator said that since different methodologies had to be considered to determine the tariff for geothermal-based projects, it had to apply with a request to determine the tariff to supply energy for the first initial control period of three years from the commercial operation date at ₹6.86 (~$0.092)/kWh for the first year, ₹6.91 (~$0.093)/kWh for the second year, and ₹6.89 (~$0.092)/kWh for the third year.

Later, the generator submitted an interim application to determine the tariff at revised rates since costs escalated due to a delay in implementing the project. A request was made to approve the tariff of ₹8.86 (~$0.02)/kWh for the first and second year, and ₹8.75 (~$0.01)/kWh, the third year of the control period.

Commission’s analysis

The Commission observed that the generator neither pursued the matter properly nor there had been any proper representation from the petitioner.

Also, several amendments to the draft PPA were sought by the generator unilaterally.

The regulator noted that the Electricity Act, 2003, mandates to publish the application made for tariff determination by a generating company to call objections and suggestions from the public. The generator had not published any such notice of the revised tariff, and TSNPDCL had not submitted its reply to determine tariff at revised rates.

Also, the applicant had not made clear how such a huge financial commitment for the project would be met.

The Commission stated that the TSNPDCL was not inclined to procure the power at such a high cost as it would burden its consumers.

TSERC added that it could not consider the case favorably as the project’s status was not clear.

According to the Ministry of New and Renewable Energy, geothermal resources mapped by the Geological Survey of India estimates 10 GW of geothermal power potential. But efforts are towards finding cost-competitive geothermal capacity in India. Recently, Oil and Natural Gas Corporation, a government-owned crude oil, and natural gas company, announced a geothermal project in the Union Territory of Ladakh. The project is planned in three phases. Phase-I involves exploratory-cum-production drilling of wells up to 500 meters depth and setting up of a pilot project of up to 1 MW capacity. Phase-II would involve deeper and lateral exploration of the geothermal reservoir by drilling an optimal number of wells, setting up a higher capacity demo project, and preparing a Detailed Project Report. Phase-III would involve the commercial development of the geothermal project. Puga and Chumathang in Eastern Ladakh happen to be the most promising geothermal fields in India.

In November last year, the Council for Scientific and Industrial Research had issued a notice inviting a tender for constructing an experimental net-zero energy solar-geothermal hybridized building at its Central Building Research Institute in Roorkee, Uttarakhand.

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