Tamil Nadu Proposes ₹6.28/kWh Tariff for Power from Municipal Solid Waste Projects

The Tamil Nadu Electricity Regulatory Commission (TNERC) has issued a consultative paper proposing the tariff for the procurement of power from municipal solid waste projects in the state.

The paper is open for comments up to March 1, 2019. The TNERC has fixed levelized tariff for these projects at ₹6.28 (~$0.088)/kWh without accelerated depreciation and ₹5.90 (~$0.082)/kWh with accelerated depreciation.

The tariff fixed in this consultative paper will be applicable to all municipal solid waste projects-based power generating projects in Tamil Nadu commissioned on April 1, 2019, or after the date of issue of the order. The open access charges and other terms and conditions will be applicable to all the projects irrespective of their date of commissioning.

The tariff determined for a project will remain in effect for the whole project life of 20 years from the date of grid connectivity. The state has considered capital cost of ₹170 million (~$2.38 million)/MW for MSW projects. It has proposed a normative plant load factor (PLF) level of 75 percent for these projects. For any generation beyond the normative PLF, an incentive of ₹0.25 (~$0.0035)/kWh has been proposed by TNERC.

The state commission has suggested a debt-equity ratio of 70:30, interest on debt at the rate of 1.5 percent per annum, return on equity of 17.60 percent (pre-tax) and a loan term of 10 years with one-year moratorium. Commission is considering operation and maintenance expenses at one month and receivables at two months as components of working capital, and rate of interest on working capital at 11.55 percent per annum.

TNERC has recommended operation and maintenance expense of 5.50 percent of the capital cost with an annual escalation of 5.72 percent on plant and machinery by reckoning 85 percent of the capital cost as the cost of plant and machinery and depreciation of 4.5 percent per annum.

TNERC has proposed levy of 60 percent of cross subsidy surcharge applicable to conventional power on municipal solid waste projects-based power generating projects. Commission has also proposed levying 60 percent of the charges applicable for conventional power for transmission, wheeling charges, scheduling and system operation charges on MSW. For MSW projects under Renewable Energy Certificates (REC), 100 percent of the applicable charges will apply.

Recently, the TNERC also issued a consultative paper proposing feed-in tariff for solar photovoltaic (PV) projects in the state of Tamil Nadu.

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