In a major boost for wind power energy generation, the Andhra Pradesh Electricity Regulatory Commission has fixed Rs 4.70 per unit tariff for 25 years for firms which sign up power purchase agreements by March 31, 2015.

Earlier, the wind power tariff in the State was Rs 3.50/unit.

The issue of tariff was proving to be major hurdle for wind power producers. Developers expressed concern that the earlier tariff was unremunerative as it was not bankable. Several leading players in the country had signed up to set up new plants but were unable to do so due to lower tariff structure. Generating companies will have to bear the expenses to evacuate power generated to the grid sub-station.

The regulator has taken the tariff period for 25 years with the life span of 25 years at a capital cost of Rs 5.75 crore per MW including evacuation. The general assumption was the capacity utilisation of 23 per cent.

Factoring a 10-year loan with interest cost of 12.30 per cent a year and a debt equity ratio of 70;30, the levellised preferential tariff was arrived at.

Distribution companies who sign up with the developers will have first right of refusal on power purchase if the plant continues after 25 years. Tariff beyond 25 years will be mutually agreed by the both the parties with the consent of the regulator.

Most of the major developers in the country – Mytrah, Welspun, Suzlon, Greenko, NSL and turbine makers GE, Gamesa, REpower among others are keenly watching the outcome of the tariff order.

(This article was published on November 15, 2012)
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