Himachal Small Hydro Power Association Association Draft - - PowerPoint PPT Presentation

Himachal Small Hydro Power Association Association

Draft Regulations on Tariff for Renewable Energy

Wednesday July 22nd, 2009

BACKGROUND BACKGROUND

• India

India has has been been bestowed bestowed with with huge huge Renewable Renewable Energy Energy Potential Potential

• India

India has has been been bestowed bestowed with with huge huge Renewable Renewable Energy Energy Potential Potential particularly particularly the the small small hydro hydro potential potential is is to to the the tune tune of

• f 15000

15000 MW MW. .

• However,

However, the the present present scenario scenario of

• f generation

generation from from Renewable Renewable , p g Sources Sources particularly particularly of

• f small

small hydro hydro sector sector is is not not very very encouraging encouraging. . In In the the last last 62 62 years years only

• nly 10

10% % of

• f the

the small small hydro hydro potential potential has has been been exploited exploited. .

• This

This is is in in spite spite of

• f the

the fact fact that that Electricity Electricity Act, Act, 2003 2003 and and every every other

• ther

policy policy document document i i. .e e National National Electricity Electricity Policy, Policy, National National Tariff Tariff Policy Policy speaks speaks of

• f promoting

promoting Renewable Renewable Energy Energy. . The The Electricity Electricity Act Act enjoins enjoins upon upon the the Regulatory Regulatory Commissions Commissions to to take take effective effective steps steps for for the the upon upon the the Regulatory Regulatory Commissions Commissions to to take take effective effective steps steps for for the the promotion promotion of

• f Renewable

Renewable Energy Energy. .

• The

The proposed proposed Draft Draft Regulation Regulation is is further further going going to to discourage discourage and and p p p p g g g g g g demoralize demoralize the the developers developers of

• f small

small hydro hydro projects projects. . It It is is devoid devoid of

• f the

the ground ground realities, realities, problems problems and and the the non non supportive supportive environment environment being being faced faced by by the the developers developers. .

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BLEAK SCENARIO OF SMALL HYDRO SECTOR BLEAK SCENARIO OF SMALL HYDRO SECTOR

• Major

Major small small hydro hydro potential potential lies lies in in Himalayan Himalayan States States. . These These states states do do not not have have enough enough infrastructures infrastructures to to support support the the various various developmental developmental activities activities because because of

• f their

their terrain terrain and and inadequate inadequate resources resources with with them them. .

• Small

Small hydro hydro projects projects being being located located on

• n Tributaries

Tributaries or

• r on
• n the

the Tributaries Tributaries of

• f

Tributaries Tributaries are are very very remote remote and and have have neither neither the the road road access access nor nor the the power power evacuation evacuation networks networks. . This This adds adds substantially substantially to to their their costs costs. .

• Small

Small Hydro Hydro projects projects do do not not enjoy enjoy economics economics of

• f scale,

scale, therefore therefore have have high high per per MW MW costs costs. .

• Because

Because of

• f their

their remote remote location location and and narrow narrow terrains terrains Small Small Hydro Hydro Projects Projects have have great great risks risks attached attached with with them, them, therefore therefore is is not not a a very very attractive attractive investment investment option

• ption.

.

• In

In the the past past Small Small Hydro Hydro Projects Projects were were located located on

• n lower

lower elevations elevations and and on

• n

the the confluence confluence of

• f tributaries

tributaries and and main main rivers rivers. . However, However, in in future future Small Small Hydro Hydro Projects Projects are are going going to to be be remotely remotely located located on

• n higher

higher elevations elevations. . As As a a lt lt th th t i i t tt t tt t i t t i t t il il

Himachal Small Hydro Power Association

result, result, they they are are not not going going to to attract attract investments investments easily easily.

3

• In

In many many recent recent Tariff Tariff determination determination orders

• rders the

the per per MW MW cost cost of

• f the

the project project has has been been taken taken based based on

• n historical

historical data data This This has has acted acted as as project project has has been been taken taken based based on

• n historical

historical data data. This This has has acted acted as as the the dampener dampener for for the the developers developers. .

• The

The result result is is that that till till now now only

• nly 15

15% % of

• f the

the projects projects allotted allotted in in Himachal Himachal P d h P d h d Utt kh d Utt kh d h b i i d i i d Pradesh Pradesh and and Uttarakhand Uttarakhand have have been been commissioned commissioned.

• The

The said said regulations regulations instead instead of

• f promoting

promoting Renewables Renewables intends intends to to regulate regulate these these sources sources. regulate regulate these these sources sources.

Himachal Small Hydro Power Association

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Comments on various provisions of draft regulations

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1.

• 1. REGULATION 3 & 4 (2): SCOPE & EXTENT OF APPLICATIONS

REGULATION 3 & 4 (2): SCOPE & EXTENT OF APPLICATIONS

• Section

Section 79 79 a a & & b b of

• f the

the Electricity Electricity Act, Act, 2003 2003 provides provides that that it it is is the the function function of

• f the

the central central commission commission to to regulate regulate tariff tariff of

• f central

central generating generating companies companies or

• r those

those generating generating companies companies which which enter enter into into or

• r otherwise
• therwise have

have a a composite composite scheme scheme for for generation generation and and sale sale p g

• f
• f electricity

electricity in in more more than than one

• ne state

state. .

• As

As per per the the Draft Draft Regulations Regulations these these regulations regulations will will not not apply apply to to 1. . Those Those projects projects which which are are selling selling intrastate intrastate. . 2 Those Those State State and and self self identified identified projects projects which which are/will are/will be be going going in in

• 2. Those

Those State State and and self self identified, identified, projects projects which which are/will are/will be be going going in in for for interstate interstate sale sale but but not not yet yet approved approved by by MNRE MNRE. .

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• 2. REGULATION 10 : TARIFF DESIGN
• 2. REGULATION 10 : TARIFF DESIGN
• The

The regulation regulation proposes proposes calculation calculation of

• f levelised

levelised tariff tariff corresponding corresponding to to useful useful life life of

• f the

the project project i i. .e e. . 40 40 years years while while the the tariff tariff period period is is fixed fixed as as 13 13 years years in in the the Draft Draft Regulations Regulations and and thereafter thereafter Power Power Procurement Procurement from from renewable renewable sources sources is is expected expected on

• n competitive

competitive Procurement Procurement from from renewable renewable sources sources is is expected expected on

• n competitive

competitive basis basis. .

• This

This is is highly highly unfair, unfair, unjustifiable unjustifiable and and against against the the concept concept of

• f

l li d l li d t iff t iff I l li d l li d t iff t iff th th h l l i i i ffi i t i ffi i t i i levelised levelised tariff tariff. In In levelised levelised tariff tariff the the cash cash accrual accrual is is insufficient insufficient in in initial initial years years i i. .e e. . debt debt service service period period which which is is compensated compensated by by extra extra cash cash accrual accrual in in the the later later years years. .

• This

This will will be be a a big big d disincentive isincentive and and no no financial financial closure closure will will be be achieved achieved if if this this regulations regulations is is finalised finalised. . Instead, Instead, the the Renewable Renewable Sources Sources should should be be provided provided with with front front loaded loaded tariff tariff so so as as to to generate generate significant significant cash cash in in the the initial initial years years to to service service the the debt debt easily

• easily. This

This will will significant significant cash cash in in the the initial initial years years to to service service the the debt debt easily

• easily. This

This will will help help in in achieving achieving faster faster financial financial closure closure and and thus thus speedy speedy implementation implementation of

• f the

the projects projects. .

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3. 3. REGULATION 11: SCHEDULING REGULATION 11: SCHEDULING

• Exemption

Exemption of

• f Small

Small Hydro Hydro Projects Projects from from UI UI charges charges proposed proposed in in

• Exemption

Exemption of

• f Small

Small Hydro Hydro Projects Projects from from UI UI charges charges proposed proposed in in Draft Draft Regulations Regulations is is very very supportive supportive to to promote promote the the Renewable Renewable Energy Energy projects projects. . Ho e er Ho e er the the proposal proposal of

• f Draft

Draft Reg lations Reg lations to to f rnish f rnish the the tentati e tentati e

• However,

However, the the proposal proposal of

• f Draft

Draft Regulations Regulations to to furnish furnish the the tentative tentative day day ahead ahead forecast forecast in in blocks blocks of

• f 1

1. .5 5 hour hour duration duration for for the the energy energy availability availability on

• n the

the collective collective basis basis at at inter inter-

• connection

connection point point to to the the concerned concerned Load Load Dispatch Dispatch Centre, Centre, is is not not feasible feasible. .

• It

It would would not not be be feasible feasible to to declare declare the the availability availability on

• n collective

collective basis basis as as number number of

• f small

small projects projects with with different different Renewable Renewable Energy Energy Technologies Technologies and and at at different different voltage voltage levels levels would would be be connected connected to to Technologies Technologies and and at at different different voltage voltage levels levels would would be be connected connected to to the the grid grid with with each each having having its its own

• wn inter

inter-

• connection

connection point point. .

• Also

Also co co-

• ordination
• rdination among

among various various generators generators would would be be practically practically impossible impossible impossible impossible.

• Therefore,

Therefore, collective collective basis basis should should be be omitted

• mitted.

. Further, Further, CERC CERC should should ensure ensure that that in in the the garb garb of

• f exemption

exemption of

• f UI

UI regime regime to to SHPs, SHPs,

Himachal Small Hydro Power Association

g p g , the the States States may may not not deny deny Open Open Access Access to to such such generators generators. .

8

• 4. REGULATION 13 & 27: CAPITAL COST
• 4. REGULATION 13 & 27: CAPITAL COST

D ft D ft R l ti R l ti ti ti it l it l t f SHP SHP

• Draft

Draft Regulations Regulations proposes proposes normative normative capital capital cost cost of

• f SHPs

SHPs as as Rs Rs. . 630 630. .00 00 Lacs/ Lacs/ MW MW for for Himachal Himachal Pradesh, Pradesh, Uttarakhand Uttarakhand & & North North Eastern Eastern States States and and Rs Rs. . 500 500. .00 00 Lacs Lacs for for other

• ther States

States. .

• These

These normative normative project project costs costs are are grossly grossly inadequate inadequate and and low low. . These These are are based based on

• n historical

historical data data of

• f Projects

Projects funded funded by by IREDA IREDA and and Projects Projects registered registered with with UFCCC UFCCC. .

• Even

Even these these costs costs are are not not true true reflection reflection of

• f the

the project project cost cost incurred/ incurred/ being being incurred incurred for for the the development development of

• f SHPs

SHPs on

• n account

account of

• f following

following reasons reasons: : a. . There There have have been been severe severe cost cost overruns

• verruns for

for the the projects projects funded funded by by IREDA IREDA. . These These have have not not been been taken taken into into account account. . b. . Secondly, Secondly, IREDA IREDA has has also also funded funded projects projects costing costing more more than than Rs Rs. . 700 700. .00 00 Lacs/MW Lacs/MW in in 2007 2007. . If If we we take take 6 6% % yearly yearly increase increase in in project project cost, cost, the the cost cost in in 2009 2009 works works out

• ut to

to Rs Rs. . 786 786. .00 00 Lacs/MW Lacs/MW. .

Himachal Small Hydro Power Association

p j p j ,

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• The

The land land cost cost have have increased increased exponentially exponentially in in the the last last 2 2-

• 3

3 years years. . The The land land

• wners
• wners have

have started started asking asking for for unrealistic unrealistic exorbitant exorbitant prices prices. . The The land land which which used used to to cost cost Rs Rs. . 60 60-

• 75

75 Lacs Lacs i i. .e e. . Rs Rs. . 12 12. .00 00 to to 15 15. .00 00 Lacs Lacs/MW /MW for for a a 5 5 MW MW Project Project 2 2-

• 3

3 years years back, back, now now costs costs Rs Rs. . 2 2. .00 00 to to 3 3. .00 00 Cores Cores i i. .e e. . Rs Rs. . 50 50. .00 00 to to 60 60. .00 00 Lacs Lacs/MW /MW. . The The projects projects cost cost on

• n this

this account account only

• nly has

has increased increased by by Rs Rs 40 40 00 00 to to 50 50 00 00 Lacs Lacs/MW /MW Rs

• Rs. 40

40.00 00 to to 50 50.00 00 Lacs Lacs/MW /MW.

• The

The various various State State Govt Govt. . over

• ver the

the year year have have levied levied many many taxes taxes & & duties duties as as below below: below below: i i. . LADC LADC ( (1 1. .5 5% %) ). . ii ii. . Free Free Power/Royalty Power/Royalty

Period Period Upto 5 MW Upto 5 MW Above 5 MW Above 5 MW 1 to 12 years 1 to 12 years 6% (0) 6% (0) 15% (12) 15% (12) 13 13th

th to 30 years

to 30 years 14% (12) 14% (12) 21% (18) 21% (18) 31 31st

st to 40 years

to 40 years 24% (18) 24% (18) 33% (30) 33% (30)

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iii iii 15% release of water. 15% release of water. iv MAT (Increased from 10% to 15%) iv MAT (Increased from 10% to 15%) iv MAT (Increased from 10% to 15%) iv MAT (Increased from 10% to 15%)

• HERC

HERC vide vide its its order

• rder dated

dated 15 15th

th May

May 2007 2007 has has considered considered project project t f R R 1025 1025 00 00 L /MW L /MW f l l b d b d SHP SHP i i H cost cost of

• f Rs

Rs. . 1025 1025.00 00 Lacs/MW Lacs/MW for for canal canal based based SHPs SHPs in in Haryana Haryana. .

• MPERC

MPERC vide vide its its order

• rder dated

dated 30 30th

th June

June 2008 2008 has has considered considered Rs Rs. .700 700. .00 00 Lacs/MW Lacs/MW for for SHPs SHPs.

• HPERC

HPERC vide vide its its order

• rder dated

dated 18 18th

th Dec

Dec. . 2007 2007 has has considered considered Rs Rs. . 650 650. .00 00 Lacs/MW Lacs/MW for for SHPs SHPs. . This This is is also also under under challenge challenge in in the the Appellate Appellate Tribunal Tribunal. .

• Recently,

Recently, Govt Govt. . of

• f Punjab

Punjab has has invited invited EOI EOI for for 55 55. .5 5 MW MW Shahpur Shahpur Kandi Kandi Project Project. . The The capital capital cost cost estimated estimated in in the the DPR DPR is is Rs Rs. . 49883 49883. .00 00 Lacs Lacs based based on

• n Nov

Nov. . 2000 2000 prices prices which which works works out

• ut to

to Rs Rs. .

Himachal Small Hydro Power Association

p 899 899. .00 00 Lacs/MW Lacs/MW. .

c. . HPSEB HPSEB has has granted granted TEC, TEC, for for many many projects projects costing costing in in the the range range of

• f Rs

Rs. . 750 750 Lacs Lacs to to Rs Rs. . 800 800. .00 00 Lacs/MW Lacs/MW in in the the recent recent g past past. . The The details details are are as as below below: :

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Project cost of the projects developed by HPSEB on their own is as below: Project cost of the projects developed by HPSEB on their own is as below:

SR. No. NAME OF PROEJCT CAPACITY (MW) TOTAL PROEJCT COST (IN CR ) PROJECT COST PER MW (IN CR ) DATE OF COMMISSIONING (IN CR.) (IN CR.)

1 Larjee 126 1294.0 10.26 2006.00 2 Khauli 12 126 3 10 52 Nov 2000 2 Khauli 12 126.3 10.52 Nov.2000 3 Ghanvi 22.5 166.3 7.39 March 2007 12 68 8 3 1996 4 Baner 12 68.8 5.73 1996 5 Gaj 10 75.5 7.55 1996 Thus Thus the the cost cost for for projects projects which which were were commissioned commissioned by by HPSEB HPSEB more more than than 3 3-

• 4

4 years years back back is is in in the the range range of

• f Rs

Rs. .739 739. .00 00 Lacs Lacs/MW /MW to to Rs Rs. . 1052 1052. .00 00 Lacs Lacs/ / MW MW.

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• Therefore,

Therefore, it it is is not not justifiable justifiable to to compare compare the the set set of

• f projects

projects based based on

• n

historical historical data data and and considering considering the the value value in in between between for for determination determination historical historical data data and and considering considering the the value value in in between between for for determination determination

• f
• f the

the cost cost. .

• It

It is is also also worth worth highlighting highlighting that that in in the the past past SHPs SHPs have have been been developed developed l l l ti l ti hi h hi h h d h d d t i i t i i d th th

• n
• n

lower lower elevations elevations which which had had road, road, transmission transmission and and

• ther
• ther

infrastructure infrastructure available available nearby nearby. . But But in in future future such such projects projects are are going going to to be be remotely remotely located located on

• n higher

higher elevations elevations. . Thus, Thus, the the per per MW MW cost cost is is likely likely to to increase increase substantially substantially. .

• In

In case case these these normative normative project project costs costs are are adopted, adopted, then then all all those those projects projects with with higher higher cost cost will will not not be be taken taken up up for for construction construction and and the the SHP SHP potential potential to to that that extent extent will will remain remain unexploited unexploited. SHP SHP potential potential to to that that extent extent will will remain remain unexploited unexploited.

• It

It is is humbly humbly requested requested to to reconsider reconsider these these normative normative costs costs and and the the HSHPA HSHPA strongly strongly feels feels that that either either the the normative normative cost cost should should be be fixed fixed at at R 800 800 L /MW L /MW ti ti t b fi d fi d d j t j t ifi ifi Rs Rs. . 800 800 Lacs/MW Lacs/MW or

• r no

no normative normative cost cost be be fixed fixed and and project project specific specific cost cost be be taken taken into into account account. .

Himachal Small Hydro Power Association

5. 5. REGULATION 14: EVACUATION INFRASTRUCTURE REGULATION 14: EVACUATION INFRASTRUCTURE D ft D ft R l ti R l ti j t j t d l d l t b ibl ibl f

• Draft

Draft Regulations Regulations proposes proposes project project developer developer to to be be responsible responsible for for evacuation evacuation infrastructure infrastructure up up to to inter inter-

• connection

connection point point. . Such Such regulation regulation would would result result in in:

• Such

Such regulation regulation would would result result in in:

• Need

Need for for large large capital capital infusion infusion by by the the project project developers developers

• Increased

Increased difficulty difficulty for for the the developers developers to to achieve achieve financial financial closure closure owing

• wing to

to the the uncertainty uncertainty regarding regarding power power evacuation evacuation the the uncertainty uncertainty regarding regarding power power evacuation evacuation

• Deterrent

Deterrent for for private private players players to to invest invest in in the the renewable renewable energy energy sector sector

• Therefore

Therefore the the respective respective distribution distribution utilities utilities should should be be responsible responsible for for

• Therefore,

Therefore, the the respective respective distribution distribution utilities utilities should should be be responsible responsible for for the the development development of

• f evacuation

evacuation infrastructure infrastructure. .

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6. 6. REGULATION 18: Return on Equity REGULATION 18: Return on Equity Draft Regulations proposes Return on Equity at 16% Draft Regulations proposes Return on Equity at 16%

• Draft Regulations proposes Return on Equity at 16%.

Draft Regulations proposes Return on Equity at 16%.

• The

The commissions commissions proposal proposal is is inadequate inadequate as as it it does does not not justify justify the the risks risks borne borne by by the the project project developers developers borne borne by by the the project project developers developers.

• Small

Small hydro hydro projects projects (SHP) (SHP) posses posses many many risks risks such such as as: :

• Geological

Geological g

• Hydrological

Hydrological

• Technical

Technical

• Moreover,

Moreover, long long gestation gestation periods periods ( (4 4 – – 5 5 years) years) associated associated with with SHPs SHPs results results in in a a much much lower lower effective effective rate rate of

• f return

return on

• n equity

equity. . Above Above stated stated factors factors will will result result in in an an effective effective return return on

• n equity

equity of

• f 10

10%

• Above

Above stated stated factors factors will will result result in in an an effective effective return return on

• n equity

equity of

• f 10

10% which which is is equivalent equivalent to to the the return return on

• n a

a AAA AAA rated rated government government security security

Himachal Small Hydro Power Association

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6. 6. REGULATION 18: Return on Equity REGULATION 18: Return on Equity Contd.

Contd.

• In

In order

• rder to

to encourage encourage private private developers developers to to investment investment in in renewable renewable energy energy sector, sector, the the rate rate of

• f return

return on

• n equity

equity should should be be increased increased to to 20 20% % Post Post-

• tax

tax. .

Incentive based

• n high plant

availability, 1% Incentive on account of sale of Base return as per CERC for ti l account of sale of secondary energy, 1% Additional premium to cover conventional energy projects, 16% premium to cover risks specific to SHP, 2%

• ROE for first 10 years

ROE for first 10 years – – 23% Pre 23% Pre-

• tax

tax

• 11

11th

th year onwards

year onwards – – 30% Pre 30% Pre-

• tax

tax

Himachal Small Hydro Power Association

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7. 7. REGULATION 20 & 31: OPERATION & MAINTENACE EXPENSES REGULATION 20 & 31: OPERATION & MAINTENACE EXPENSES

• Draft

Draft Regulations Regulations proposes proposes O O & & M M expenses expenses at at Rs Rs. . 12 12. .00 00 Lac/ Lac/ MW MW with with an an annual annual escalation escalation of

• f 5.

.72 72% % per per annum annum. .

• These

These are are also also grossly grossly on

• n lower

lower side side. . It It will will be be optimal

• ptimal to

to go go into into the the individual individual elements elements of

• f cost

cost and and price price them them at at their their correct correct value value to to arrive arrive at at a realistic realistic assessment assessment. The The costing costing exercise exercise for for a 1 MW MW arrive arrive at at a realistic realistic assessment assessment. The The costing costing exercise exercise for for a 1 MW MW project project under under operation

• peration in

in state state of

• f Punjab

Punjab is is as as below below:

Himachal Small Hydro Power Association

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SR. NO. ITEMS RS. IN LAC I S l i & W (3 Shift ) 26 00 I Salaries & Wages (3 Shifts) 26.00 II Repair & Maintenance (Including consumables) 20.00 III L.C Charges opened by PSEB 0.20 g p y IV Admin., Audit & legal cost. 2.00 V Traveling & Conveyance 2.00 VI Housekeeping 0.50 VII Insurance 17.59 VIII Mill Channel compensation 7.67 VIII Mill Channel compensation 7.67 IX Contribution to NRSE fund/ Cess Charges 3.60 TOTAL: 79.56 Thus, Thus, the the fixation fixation of

• f O&M

O&M cost cost at at Rs Rs. . 12 12. .00 00 Lac/MW Lac/MW per per annum annum is is grossly grossly low low. . In In the the light light of

• f above

above it it is is humbly humbly requested requested that that O O & & M M cost cost should should be be

Himachal Small Hydro Power Association

g y q fixed fixed higher higher at at a a realistic realistic level level. .

Break Break-

• up

up of

• f Salary

Salary & & Wages Wages : : S. NO DESCRIPTION RS. (LACS) a Plant Manager-1 No. @ Rs. 40000/-each 4.8 b Plant Shift Supervisor 4 Nos @ Rs 15000/ PSS/Month 7 2 b Plant Shift Supervisor- 4 Nos.@ Rs.15000/-PSS/Month 7.2 c Technical Assistants- 7 Nos. Rs. 6000/-each/month 5.0 d Maintenance Executive-1 Nos. @ Rs. 15000/- each/month. 1.8 Maintenance Staff Electricians/ Fitter 3 Nos e Maintenance Staff Electricians/ Fitter 3 Nos. @ Rs.10000/-each/month 3.6 f Finance,Commercial,Secretarial,HR-2 Nos. @Rs.15000/- h 3.6

Himachal Small Hydro Power Association

each 3 6

• 8. REGULATION 21: SHARING OF CDM BENEFITS.
• 8. REGULATION 21: SHARING OF CDM BENEFITS.

U f t t l U f t t l th th D ft D ft R l ti R l ti h l k d l k d t C b C b C dit C dit

• Unfortunately,

Unfortunately, the the Draft Draft Regulations Regulations has has looked looked at at Carbon Carbon Credits Credits under under the the CDM CDM mechanism mechanism in in a a routine routine manner manner as as additional additional income income which which needs needs to to be be shared shared with with the the beneficiaries beneficiaries. . The The very very genesis genesis of

• f availability

availability of

• f CDM

CDM benefits benefits is is that that these these are are given given to to t / t / t i t i b i b i f d f d b th th d l d l compensate/ compensate/ overcome

• vercome certain

certain barriers barriers faced faced by by the the developers developers . .

• The

The sharing sharing scheme scheme proposed proposed in in the the Draft Draft Regulations Regulations will will jeopardize jeopardize the the very very basis basis of

• f eligibility

eligibility of

• f CDM

CDM benefits benefits jeopardize jeopardize the the very very basis basis of

• f eligibility

eligibility of

• f CDM

CDM benefits benefits.

• Beneficiaries

Beneficiaries are are not not bothered bothered about about the the challenges challenges or

• r risks

risks associated associated with with the the development development of

• f projects

projects. . The The income income from from C b C b C dit C dit i i t iti t iti t th th i k i k tt h d tt h d ith ith th i th i Carbon Carbon Credits Credits is is to to mitigate mitigate the the risks risks attached attached with with their their development development. .

• Thus

Thus the the CDM CDM benefits benefits should should be be allowed allowed to to be be retained retained by by the the

• Thus

Thus the the CDM CDM benefits benefits should should be be allowed allowed to to be be retained retained by by the the developers developers. .

Himachal Small Hydro Power Association

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9. . REGULATION REGULATION 22 22: : SUBSIDY SUBSIDY AND AND INCENTIVES INCENTIVES BY BY THE THE CENTRAL/ CENTRAL/ STATE STATE GOVT GOVT. .

• Draft

Draft Regulations Regulations specifies specifies that that Capital Capital Subsidy Subsidy or

• r incentive

incentive offered

• ffered by

by the the Central/State Central/State Govt Govt. . to to the the project project developers developers would would be be considered considered while while determining determining the the Tariff Tariff. .

• The

The Govt Govt. . of

• f India

India through through MNRE MNRE provides provides capital capital subsidy subsidy mainly mainly on

• n

account account of

• f following

following: : 1. . To To attract attract investments investments in in Renewable Renewable Energy Energy sector sector by by offering

• ffering

reward reward to to the the developers developers for for taking taking up up the the projects projects in in difficult difficult and and harsh harsh environment environment. . 2. . To To compensate compensate the the risks risks and and costs costs associated associated with with the the development development of

• f SHPs

SHPs.

• The

The proposal proposal of

• f taking

taking capital capital subsidy subsidy into into account account for for determination determination of

• f

tariff tariff means means giving giving incentive incentive by by one

• ne hand

hand and and taking taking it it away away by by the the

• ther
• ther.

.

Himachal Small Hydro Power Association

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• SHPs

SHPs are are still still at at nascent nascent stage stage and and needs needs support support to to attract attract S s S s a e a e st st at at asce t asce t stage stage a d a d eeds eeds suppo t suppo t to to att act att act investment investment in in the the sector sector. .

• Rather

Rather it it must must be be ensured ensured that that the the reimbursement reimbursement of

• f any

any additional additional

• Rather

Rather it it must must be be ensured ensured that that the the reimbursement reimbursement of

• f any

any additional additional levy, levy, taxes/duties taxes/duties imposed imposed by by the the Central/State Central/State Govt Govt. . on

• n IPPs

IPPs from from time time to to time time must must be be built built into into the the Tariff Tariff. .

Himachal Small Hydro Power Association

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10 10. . REGULATION REGULATION 30 30: : AUXILIARY AUXILIARY CONSUMPTION CONSUMPTION Draft Draft Regulations Regulations proposes proposes that that the the normative normative auxiliary auxiliary

• Draft

Draft Regulations Regulations proposes proposes that that the the normative normative auxiliary auxiliary consumption consumption for for SHPs SHPs to to be be 0 0. .5 5% %

• Firstly,

Firstly, these these does does not not include include transformation transformation losses losses. . y, y, Transformation Transformation losses losses are are in in the the range range of

• f 1 to

to 1 1. .5 5% %. .

• Secondly,

Secondly, the the auxiliary auxiliary consumption consumption based based on

• n actual

actual date date is is as as below below : below below : 1. 1. Operation Operation loads loads like like cooling cooling water water-

• pumps,

pumps, booster booster pumps, pumps, trash trash machine, machine, turbines turbines OPU, OPU, Gearbox Gearbox 1.0% 1.0% p p p p OPU OPU. . 2. 2. Lighting like tubes/HPSV lamps Lighting like tubes/HPSV lamps 0.3% 0.3% 3. 3. Ventilation equipment like exhaust fans. Ventilation equipment like exhaust fans. 0.3% 0.3% Total Auxiliary Consumption: Total Auxiliary Consumption: 1 6% 1 6%

Himachal Small Hydro Power Association

Total Auxiliary Consumption: Total Auxiliary Consumption: 1.6% 1.6%

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• For

For underground underground Power Power Houses Houses the the Auxiliary Auxiliary Consumption Consumption excluding excluding transformation transformation losses losses is is 2 2. .5 5 to to 3. .0 0 % %

• In the light of this, the Auxiliary Consumption and transformation

In the light of this, the Auxiliary Consumption and transformation losses need to be reassessed and a detailed actuaL study may be losses need to be reassessed and a detailed actuaL study may be carried out in this regard. carried out in this regard. OTHER SUBMISSIONS: OTHER SUBMISSIONS:

• It is pertinent to mention that many State Govts. are purchasing

It is pertinent to mention that many State Govts. are purchasing power from SHPs at very low Tariff like Rs. 2.50 to Rs.3.00 per unit power from SHPs at very low Tariff like Rs. 2.50 to Rs.3.00 per unit and selling their surplus power to other states at the rate of market and selling their surplus power to other states at the rate of market rates of Rs 7 00 to Rs 8 00 per unit They are making unjustified rates of Rs 7 00 to Rs 8 00 per unit They are making unjustified rates of Rs. 7.00 to Rs. 8.00 per unit. They are making unjustified rates of Rs. 7.00 to Rs. 8.00 per unit. They are making unjustified profits at the cost of SHPs. profits at the cost of SHPs.

• The

The Draft Draft Regulations Regulations should should have have some some provisions provisions on

• n the

the profit profit g p p sharing sharing with with IPPs IPPs by by buyers buyers of

• f power

power of

• f SHPs

SHPs who who further further trade trade their their power power. .

Himachal Small Hydro Power Association

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Thanks Thanks

Himachal Small Hydro Power Association

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