Chhattisgarh Issues Tariff Determination Criteria for Renewable Energy Projects

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					</table>The Chhattisgarh State Electricity Regulatory Commission (<a href="https://cserc.gov.in/" target="_blank" rel="noopener">CSERC</a>) has issued regulations to determine the tariff for the sale of renewable energy to distribution licensees effective April 1, 2025.
The Chhattisgarh State Electricity Regulatory Commission (Terms and conditions for determination of tariff for Renewable Energy sources) Regulations, 2024 will apply to new renewable energy projects achieving commercial operation from April 1, 2025, to March 31, 2030.
For existing renewable energy projects with long-term power purchase agreements with distribution licensees for 20 years or more and commissioned before March 31, 2025, the tariff will be governed by respective tariff orders.
Eligibility
Only new wind power projects using new plants and machinery will qualify.
Only solar PV, floating solar projects, solar thermal projects, and rooftop solar systems based on government-approved technologies will qualify.
Floating solar projects installed with existing renewable energy projects other than ground-mounted solar projects will be treated as renewable hybrid energy projects.
A project will qualify as a hybrid renewable energy project if it uses new plant and machinery and its rated generation capacity from each renewable energy source is at least 33% of the total installed capacity.
It must also operate at the same interconnection point. The energy must be injected into the grid at the same interconnection point, and metering must be done at such a common interconnection point.
A project will qualify as a renewable energy with storage project if it uses, partly or wholly, energy from such project to store energy in a storage facility and is connected at the same point of interconnection.
Tariff period
The tariff period for new renewable energy projects will be the same as their useful life.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/11/CSERC-table.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-73122 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/11/CSERC-table.png" alt="" width="717" height="456" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/11/CSERC-table.png 717w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/11/CSERC-table-300x191.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/11/CSERC-table-650x413.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/11/CSERC-table-624x397.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/11/CSERC-table-600x382.png 600w" sizes="(max-width: 717px) 100vw, 717px" /></a>
Generic tariff
A generic preferential tariff will be determined from the project&#8217;s COD for solar power projects with 0.5 MW to 2 MW capacity.
Tariff Structure
The tariff will be a single-part tariff consisting of fixed-cost components like return on equity, interest on loan capital, depreciation, interest on working capital, and operation and maintenance expenses.
Tariff design
If the project generates excess energy beyond the capacity utilization factor (CUF) or the plant load factor (PLF) it can sell such excess energy in the market under bilateral or collective transactions, and the first right of refusal for such excess energy must vest with the beneficiary concerned.
In case the concerned beneficiary purchases the excess energy, the tariff for such excess energy must be equal to the tariff applicable for that year.
Renewable energy projects with storage must be subjected to scheduling only for the purposes of grid operations. However, scheduling and deviation settlement will apply if the power is supplied to multiple beneficiaries.
Capital cost
Capital costs include land costs, all capital work, including plant and machinery, civil work, erection and commissioning, financing costs, preliminary and pre-operative expenses, interest during construction, and evacuation infrastructure up to the interconnection point.
The generating company must submit the breakdown of capital cost items for project-specific tariff determination.
Debt-equity ratio
For the suo-moto determination of generic tariff, the debt-equity ratio must be considered as 70:30.
For project-specific tariffs, if the equity actually deployed is more than 30% of the capital cost, equity over 30% must be treated as a normative loan. If the equity deployed is less than 30% of the capital cost, the actual equity must be considered to determine the tariff.
The equity ratio must be considered after deducting the amount of grant or capital subsidy received for the project to arrive at the amount of debt and equity.
Interest on loan and finance charges
The tariff will be determined by considering loan/debt tenure of 15 years.
The loans/debts arrived at by the debt-equity ratio will be considered gross normative loans for calculating interest on the loans.
The normative loan outstanding as of April 1 of every year must be worked out by deducting the cumulative repayment up to March 31 of the previous year from the gross normative loan.
Depreciation
The value base for depreciation must be the capital cost of the asset admitted by the Commission. The asset&#8217;s salvage value will be considered as 10% and depreciation will be allowed up to a maximum of 90% of the capital cost of the asset. The depreciation rate for the first 15 years of the tariff period must be 4.67% annually, and the remaining depreciation must be spread over the remaining useful life of the project from the 16th year onwards.
Return on equity
For project-specific tariff determination, the value base for the equity must be 30% of the capital cost or actual equity.
The normative return on equity for renewable energy projects other than small hydro projects must be 14% of the latest available notified Minimum Alternate Tax rate for the entire tariff period.
Interest on working capital
The working capital requirement concerning wind energy projects, solar PV , floating solar projects, and renewable energy with storage projects must be computed based on operation and maintenance for one month, receivables equivalent to 45 days of energy charges for the sale of electricity calculated on the normative PLF or CUF, and maintenance spares @ 15% of operation and maintenance expenses.
In the case of hybrid renewable energy projects, the working capital requirement must be the sum of the working capital requirement determined as per norms applicable for renewable energy sources in proportion to their rated capacity in the project.
O&amp;M expenses
Operation and maintenance expenses must comprise repair and maintenance expenses, establishment including employee expenses, and administrative and general expenses, including insurance.
The tariff period will be determined based on normative O&amp;M expenses specified by the Commission in these regulations for the first year of the control period.
O&amp;M expenses must be escalated at the rate of 5.25% per annum over the tariff period.
Technology-specific parameters:
Wind projects
The Commission will determine only project-specific tariffs and capital costs based on prevailing market trends for wind energy projects.
It must determine only project-specific O&amp;M expenses based on the prevailing market information.
Floating solar projects
The Commission will determine only project-specific capital costs and tariffs based on prevailing market trends for floating solar projects.
The CUF for floating solar projects must be 19%.
The Commission will determine project-specific O&amp;M expenses only. The auxiliary consumption must be 0.25%.
Renewable hybrid projects
The Commission will determine only project-specific capital costs and tariffs based on prevailing market trends for renewable hybrid energy projects.
It will determine only project-specific CUF, considering the proportion of rated capacity of each renewable energy source and applicable CUF for such source.
The minimum CUF must be considered 30% at the interconnection point.
The project-specific O&amp;M costs will be determined by considering the proportion of rated capacity of each source and applicable O&amp;M cost for such source.
The tariff for a hybrid renewable energy project must be a composite levelized tariff for the whole project by factoring in the tariff components up to the minimum of the useful life.
Storage projects
The Commission will determine only project-specific capital costs and tariffs based on prevailing market trends for renewable energy with storage projects.
Only project-specific capacity utilization factors will be determined by the Commission.
The Commission will consider applicable CUF based on the actual renewable energy technology with storage.
The Commission will approve storage efficiency for project-specific tariffs where the minimum efficiency for solid-state battery storage is 80%, and the minimum efficiency for pumped storage is 75%.
The Commission must consider only project-specific O&amp;M costs based on prevailing market trends for renewable energy with storage projects.
The tariff will be determined for power supply on a round-the-clock basis or for time periods as agreed by the project developer and beneficiary.
Tariffs for the sale of electricity by the generating company may also be determined in deviation from the norms specified in these regulations.
In July 2023, the Chhattisgarh regulator said that the cross-subsidy surcharge for open access power consumers must not <a href="https://www.mercomindia.com/chhattisgarh-caps-open-access-surcharge-20-supply-cost" target="_blank" rel="noopener">exceed </a>% of the average cost of supply of power, according to the state regulator&#8217;s recently issued amendment.
Subscribe to Mercom’s real-time <a href="https://www.mercomindia.com/product/mercoms-renewable-energy-regulatory-updates" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.

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