Date: 21-Apr-2023Category: Extra OrdinaryState: Union GovernmentCountry: India
In pursuance of paragraph 5 1 and paragraph 6 4 of the Ministry of Power s Resolution dated 22 07 2020on Guidelines for Tariff Based Competitive Bidding Process for Procureent of Round The Clock Power from Grid Connected Renewable Energy Power Projects,
The Central Electricity Regulatory Commission (CERC) has notified the annual escalation rates and discount rate to be used for bid evaluation for tariff-based competitive bidding processes for Round-The-Clock (RTC) power from grid-connected renewable energy projects complemented with power from coal-based thermal power projects.
These rates are applicable for bids opening up to March 31, 2024.
This notification is issued in pursuance of the Ministry of Power's guidelines dated July 22, 2020, read with amendment dated November 3, 2020, regarding tariff-based competitive bidding for RTC power.
Key Changes
The notification specifies annual escalation rates for various components used in power generation, including domestic coal (3.76%), domestic gas (2.44%), and imported coal (-2.03%) and imported gas (-3.62%).
It also includes escalation rates for inland transportation charges for both coal and gas, with rates varying based on distance. For example, inland coal transportation escalation ranges from 12.81% (up to 125 km) to 5.51% (beyond 2000 km).
Escalation rate for transportation of imported coal and gas is negative (-6.50%).
A discount rate of 7.70% is to be used for bid evaluation.
Impact Analysis
Power Generation Companies
Action Items: Review existing bid strategies and financial models to align with the notified escalation and discount rates. Assess the impact on project costs and competitiveness.
Renewable Energy Developers
Action Items: Understand how the escalation rates for coal and gas will impact the overall cost structure of RTC power projects involving thermal power components. Factor these rates into project planning and bidding.
Electricity Regulatory Commissions (SERCs)
Action Items: Stay informed about the implementation of these guidelines at the state level and their implications for tariff determination.
Consumers
Action Items: Monitor the impact of these guidelines on electricity tariffs and advocate for cost-effective power procurement strategies.
Investors
Action Items: Conduct thorough due diligence, incorporating these escalation rates and discount rates into investment decisions. Assess the long-term impact on project returns.
Key Entities Referenced
Central Electricity Regulatory Commission (CERC): The statutory body responsible for regulating the electricity sector in India, including tariff regulation, licensing, and promoting competition.
Ministry of Power: The government ministry responsible for the development of the power sector in India, including policy formulation and planning.
Guidelines for Tariff Based Competitive Bidding Process for Procurement of Round-The-Clock Power from Grid Connected Renewable Energy Power Projects, complemented with Power from Coal Based Thermal Power Projects: The guidelines issued by the Ministry of Power on July 22, 2020 (with amendment dated November 3, 2020) that provide the framework for tariff-based competitive bidding for RTC power projects.