These Paddy Straw Based Biomass Projects in Haryana Could Address Environmental Issues

The Haryana Electricity Regulatory Commission (HERC) has set the state’s levelized tariffs for three biomass power projects. The tariffs set by the Commission are ₹4.93 (~$0.07)/kWh, ₹4.92 (~$0.06)/kWh, and ₹4.47 (~$0.05)/kWh.

Background

The Haryana Renewable Energy Development Agency (HAREDA) had floated the request for proposal (RfP) for paddy straw-based biomass power projects in Haryana on August 03, 2017. The projects were proposed to be set up in Ambala, Karnal, Kurukshetra, Jind, Kaithal, and Fatehabad district with an aggregate capacity of about 50 MW.

The Commission had approved power purchase agreements (PPAs) for a total of 49.8 MW of paddy straw biomass-based power projects signed between the developers and the Haryana Power Purchase Center (HPPC) in January last year.


Hind Samachar Limited filed a petition to determine the tariff for the sale of power from a 15 MW paddy straw-based biomass power project.

Hind Samachar had won the bid to develop a paddy straw-based biomass power project for the generation of 15 MW in the Kurukshetra district of Haryana. It signed the PPA with HPPC on February 22, 2019.

In another case, Sukhbir Agro Energy Limited filed a petition to determine the tariff for the sale of power from a 15 MW paddy straw-based biomass power project in Haryana’s Kaithal district. Sukhbir Agro also signed the PPA on February 22, 2019, with HPPC.

Lastly, Sainsons Paper Industries Private Limited filed a petition seeking a project-specific determination of tariff for the sale of 3.5 MW power from its 5 MW biomass-based power project at Pehowa in Haryana.

The project was commissioned in July 2017. The petitioner had offered to sell 3.5 MW power from the project to the state power utilities in 2017.

Commission’s Analysis

After considering the submissions made by Hind Samachar, HAREDA, and HPPC, the Commission addressed the serious environmental issues arising from the burning of paddy stubble in the state and the national capital region (NCR). The Commission said that such power projects using paddy straw as a fuel could help meet the National Green Tribunal and the Haryana government’s social objectives and concerns.

The Commission restricted the project’s capital cost as ₹65.2 million (~$874,911)/MW and set the interest on working capital as 8.11%, including a margin of 1% given the prevailing rate of interest. The operation and maintenance expenses were set as ₹4.72 million/MW.

After carefully examining facts, the Commission considered it appropriate to adopt the fuel cost for FY 2020-21 as ₹2,082 (~$27.9)/MT.

The state regulator examined factoring in the discount of ₹0.73 (~$0.009)/kWh applicable to the ceiling tariff of ₹8 (~$0.11)/kWh and decided that the same would be reduced from year to year tariff.

Based on the parameters discussed above, the state regulator determined the levelized of ₹4.93 (~$0.07)/kWh for the project.

Similarly, in the second petition filed by Sukhbir Agro, the Commission examined the issue of factoring in of discount of ₹0.71 (~$0.009)/kWh applicable on the ceiling tariff of ₹8 (~$0.11)/kWh and decided that it would be reduced from the yearly tariff. The other factors in this petition remained the same as the petition filed by Hind Samachar. Based on the relevant parameters, the Commission adopted the levelized tariff of ₹4.92 (~$0.006)/kWh for the project.

In the third petition filed by Sainsons Paper Industries, the Commission adopted the project’s normative capital cost as ₹49.2 million (~$660,209)/MW.

The Commission considered the term loan as ₹120.5 million (~$1.6 million), with a repayment period of 13 years at an interest rate of 10.17% per year.

Further, after considering both parties’ submissions, the Commission restricted the O&M expenses to ₹2.1 million (~$28,179)/MW for the base year (FY 2017-18) with an escalation factor of 5.72% per year.

The regulatory body set the fuel cost for FY 2017-18, 2018-19, and 2019-20, at ₹1,985 (~$26.6)/MT, ₹2,416 (~$32.4)/MT, and ₹1,983 (~$26.6)/MT, respectively and from FY 2020-21 with annual escalation of 5% on the fuel cost of ₹1,983 (~$26.6)/MT. Accordingly, the Commission determined the levelized tariff as ₹4.47 (~$0.05)/kWh for the project.

Last month, the Ministry of New and Renewable Energy extended its biomass-based cogeneration program’s validity. The program has been extended until March 31, 2021, or until the 15th Finance Commission’s recommendations come into effect, whichever comes first. The program was set to end in March 2020.

Previously, Mercom reported that HERC had issued an order approving the PPAs for 3 MW of biomass procurement by HPPC. HPPC had petitioned to approve the draft PPA to be signed with RSL Distilleries Pvt Ltd., to purchase 3 MW of power from the 5.55 MW biomass cogeneration unit at the village Chandrao in Haryana.

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