Rajasthan Commission Issues Draft Tariff Regulations for Biomass and Biogas Projects

The Rajasthan Electricity Regulatory Commission (RERC) has issued draft terms and conditions for the determination of tariff for biomass, biogas, and biomass gasifier energy.

These regulations will come into force from the date of their notification in the Official Gazette.

Key Amendments

  • The RERC will determine project specific tariff, on case to case basis.
  • If the equity deployed is more than 30 percent of the capital cost, equity in excess of 30 percent will be treated as normative loan.
  • Cases where equity deployed is less than 30 percent of the capital cost, the actual equity will be considered for the determination of tariff.
  • For generic tariff, loan tenure of 13 years will be considered.
  • For the computation of tariff, normative interest rate of two hundred basis points above the average State Bank of India (SBI) marginal cost of funds-based lending rate (MCLR) (one-year tenor) prevalent during the last available six months will be considered.
  • The value base for the purpose of depreciation will be the capital cost. The salvage value of the asset will be 10 percent and depreciation will be allowed up to a maximum of 90 percent of the capital cost of the asset.
  • Depreciation rate of 5.28 percent per annum for the first 13 years will be considered and remaining depreciation will be spread out during the remaining useful life of the project.
  • The normative return on equity (RoE) will be 14 percent.
  • Interest on working capital will be at interest rate equivalent to the normative interest rate of three hundred basis points above the average SBI MCLR (one-year tenor) prevalent during the last available six months for the determination of tariff.
  • The tariff of projects set up under renewable energy certificate (REC) mechanism will be governed Renewable Energy Obligation Compliance Framework Regulation, 2010.

The draft is up for comments and suggestions up to January 21, 2019.

Recently, the commission also released a staff paper on projects registered under renewable energy certificate (REC) mechanism in the state, analyzing the issues being faced by generators which are registered under REC mechanism and have power purchase agreements (PPAs) with the state distribution companies (DISCOMs).

Image credit: UNDP

Saumy Prateek Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.