Kerala Commission Approves Tariff of ₹4.23_kWh for a 1 MW Wind Project

The Kerala State Electricity Regulatory Commission (KSERC) has approved a levelized tariff of ₹4.23 (~$0.059)/kWh without the benefit of accelerated depreciation benefits for the electricity generated from a 1 MW wind power project installed by Kosamattom Finance Limited (KFL) at Ramakkalmedu.

The tariff has been set at ₹3.93 (~$0.055)/kWh if the benefit of accelerated depreciation is utilized, and the commission has directed KFL to enter into a PPA with the Kerala State Electricity Board (KSEB) at this tariff.

In its petition, KFL had requested the commission to approve the tariff of ₹6.33 (~$0.089)/kWh without accelerated depreciation benefits. It had also asked the commission to approve the power generated from the 1 MW project to be fed into the grid and paid for by the distribution licensee, KSEB.

Background



In response to an earlier petition filed by KFL, KSERC had asked KSEB and KFL to arrive at a consensus regarding the date of commercial operation, tariff period, and the effective date and the terms of the power purchase agreement (PPA) for the 1 MW wind energy project in the state.

KFL had petitioned the commission to approve the proposed project-specific tariff of ₹6.33 (~$0.089)/kWh and declare May 21, 2018, as the date of the commercial operation for the 1 MW wind energy project developed by the company in Kerala. KFL had also asked the body to direct KSEB to pay the average pooled purchase cost (APPC) of ₹3.93 (~$0.055)/kWh until the commission comes out with an order.

As per the petition documents, KFL had developed the 1 MW wind project at Ramakkalmedu, Idukki, and proposed to enter an agreement for the sale and transmission of power generated from the project to KSEB. The total cost incurred for installing the 1 MW project was estimated to be nearly ₹83.4 million (~$1.17 million).

KSEB granted connectivity on March 13, 2018, for the test run of the four 250 kW generators with the condition that there will not be any obligation on the part of the KSEB for the power to be injected to the grid during the testing period until a PPA is executed with KSEB.

KSEB submitted to the commission that the tariff of ₹6.33 (~$0.089)/kWh, as claimed by the petitioner, was exorbitantly high compared to the tariffs of recently commissioned wind projects in the country.

KSEB also noted that the request of the petitioner to allow the continuation of energy injection to the grid may be rejected as the action of the petitioner is against the regulations of the KSERC (Connectivity and Intrastate Open Access) Regulations, 2013.

Later, KSEB, through its affidavit, submitted the following comments on the additional details submitted by the petitioner.

  • The capital cost of ₹83.4 million (~$1.17 million)/MW claimed by the petitioner is on the higher side considering the cost reduction in wind technology.
  • KSEB also said that the total cost of the land purchased by the petitioner comes to ₹ 1.91 million (~$26, 825) instead of the ₹4 million (~$56,178) as submitted by the petitioner.
  • For a wind project, the project and machinery cost is normally in the range of ₹46 million (~$646,049)/MW. However, the petitioner has claimed a very high project and machinery cost of ₹57.6 million (~$808,966)/MW.
  • KSEB had submitted that connectivity was granted to the project on March 13, 2018, and the project was synchronized with the grid on March 20, 2018. While granting connectivity, KSEB had communicated to the petitioner that there would be no commercial obligation on the part of the KSEB for the power injected to the grid from the project until a PPA is executed with KSEB.

The commission observed that as per the deliberations before the commission, and documents submitted, the petitioner and the respondent had mutually agreed on the following:

  • Both the parties agreed on the commercial operation date (CoD) of the project as on December 22, 2018
  • Both the parties agreed to adopt the effective date of the PPA as October 27, 2018
  • Both the parties agreed to adopt the tariff period for signing the PPA as 13 years

The commission observed that the levelized tariff for the electricity generated from the 1 MW wind energy project installed by KFL at Ramakkalmedu had been approved at ₹4.23 (~$0.059)/kWh without the benefit of accelerated depreciation and ₹3.93 (~$0.055)/kWh, with it. The petitioner has been asked to submit copies of the income tax returns every year to the respondent KSEB as documentary evidence if they do not claim accelerated depreciation.

The commission also noted that the levelized tariff approved by the commission is applicable for the entire electricity injected into the grid from the effective date of the PPA mutually agreed by the parties since there was no understanding between the petitioner and KSEB Ltd to purchase of the power injected during the testing period until the PPA is executed with KSEB.

The commission further added that KSEB should make the payment for the energy injected into the grid during the testing period at the APPC approved by the commission.

Recently, in response to a petition filed by KSEB for the approval of a power sale agreement with the Solar Energy Corporation of India (SECI), KSERC had issued an order stating that the agreement must be modified to reflect the updated regulations by Ministry of Power before its approval. The KSEB had filed the petition seeking approval for the 200 MW wind PSA with SECI so it could meet its renewable purchase obligations (RPO).