The Hindu Business Line : Biomass power promoters in AP pull the plug

Most units are dependent on rice husk and its prices have increased several folds in the last three years from Rs 200 per tonne to Rs 1,500 per tonne.

Hyderabad , March 25

CLAIMING that frequent policy changes related to power tariff were rendering their units economically unviable, the promoters of biomass power plants in Andhra Pradesh have announced their decision to close down the units and hand them over to the Government.

The promoters of 30 biomass power plants, with a capacity of 170 MW and investments up to Rs 800 crore, under the banner of Biomass Energy Developers' Association (BEDA), told presspersons that they would request the Government to take over their units and repay their investments.

The BEDA President, Mr G. Ramesh, Secretary, Mr U. Veerendra Kumar, and Vice-President, Mr K. Abhiram Reddy, said it is impossible to run the industry if the Government keeps changing its policies and does not adhere to commitments given at the time of luring the industrialists to set up units.

At the time of inviting investments into biomass power sector, the Non-Conventional Energy Development Corporation of AP (NEDCAP) had offered incentives such as third party sales with two per cent wheeling charges for 20 years. However, the AP Electricity Regulatory Commission (APERC) changed the regulations on third party sales and stipulated 28.4 per cent wheeling charges.

Terming the latest tariff fixed by APERC at Rs 2.40 per unit at 100 per cent plant load factor (PLF) (compared to the existing tariff of Rs 3.48 per unit) as highly unviable for biomass power plants, they said the commission has not taken into account the advantages that AP Transmission Corporation (AP Transco) and the rural society were enjoying from the biomass power plants while arriving at the new tariff.

Earlier, the BEDA representatives made several representations to the APERC not to bring down the power tariff. The association's top brass said the key problem currently being faced was the procurement of required biomass raw materials.

Most units are dependent on rice husk and its prices have increased several folds in the last three years from Rs 200 per tonne to Rs 1,500 per tonne.

"Hence, the cost of production from these biomass power plants is high when compared to the conventional plants using conventional fuels such as coal and natural gas," the representatives said.

Terming the linkage of tariff to PLF as an unjustified move, they said such a linkage did not exist anywhere in the country for small units like biomass power plants.

"Even though it is an open secret that the prices of biomass fuels are purely depending on the demand and supply factor in the open market, it is surprising to see APERC fixing the variable costs for five years. It is highly impossible to run any unit for that matter, which is entirely dependent on the open market for its raw materials within the limits fixed by any Government authority," they viewed.

More Stories on : Non-conventional Energy | Andhra Pradesh

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