Rewards for power from sun, wind

Published: Thursday 15 October 2009

Renewable energy incentives will be based on generation

on september 16, the Central Electricity Regulatory Commission issued the regulations for fixing tariff on electricity generated from renewable energy sources like solar power and wind.

The regulations specify that government incentives for renewable energy will be based on actual production and not on capacity. The former system of incentives gave tax breaks on investment but it turned out that power generated was not commensurate with investment. The regulations also specify the investment costs for different types of power plants.

The cost has been worked out at Rs 170 per watt (W) for solar power plants, Rs 50/W for small hydel projects, Rs 51.5/W for wind projects and Rs 45/W for biomass projects. The regulatory body assured that companies setting up renewable energy plants will get 19 to 24 per cent annual returns on investment.These norms will determine the rate at which states purchase power from the companies. Earlier, state governments negotiated the purchase rates directly with the companies.

Once the tariffs are fixed, they would remain unchanged for 13 years. But in the case of solar power, tariffs will be fixed for 25 years; for small hydel projects, the period will be 35 years.

Commission officials said the regulations have been framed keeping in view the Prime Minister's National Action Plan on Climate Change. The national plan stipulates that minimum five per cent energy purchased by states must be from renewable energy from 2010 onwards; this should be increased by one per cent every year till 2020. The new norms are meant to prevent companies over-declaring costs and ensure optimum utilization of capacity.

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