Natgrp: Oddly enough over the last few years the biomass industry has faced a number of issues sourcing agricultural waste from local farmers due to the nearsightedness of not tying up the supply chain using professional methods which has led to the current crisis
Industry unhappy over unremunerative tariff in a scenario of rising biomass prices – The Business Standard
Amid growing regulatory and administrative uncertainties the biomass-based power producers have sought the intervention of Forum of Regulators (FoR) for early resolution of issues relating to open access, cross subsidy, CDM sharing, penalty clause imposed by certain distribution companies for maintaining plant load factor and the tariff structure. These producers have argued that the tariff fixed by the state electricity regulatory commissions was unremunerative as rising prices of biomass, which was sourced by producers against cash payments, were not captured properly. Besides, they said the revenue realisation takes two months to over one year due to rapidly deteriorating financial position of state utilities which results in the shutting down of some plants and mounting losses.
Indian Bio Mass Power Association, a representative body of biomass based power producers and Andhra Pradesh based Shalivahana Green Energy in their separate presentations to the FoR, which is an apex body of power regulators, have brought to its notice that despite the potential of 18,000 Mw at present only 1,150 Mw of bio mass power projects were commissioned but some of them have been closed down or limping.
D Radhakrishna, secretary general, Indian Bio Mass Power Association told Business Standard “The Central Electricity Regulatory Commission has introduced renewable energy certificates (REC) to encourage renewable energy sector and most state electricity regulatory commissions (SERCs) have framed the regulations in this regard. While this has been a positive development to make RE projects viable, some states are dissuading project developers to opt for REC scheme in their anxiety to meet their renewable power obligations (RPO). Already some states have revised their transmission and distribution charges multi fold as also imposing cross subsidy charges apart from bringing in new conditions.” Ineffect, he said the cost of getting REC, which is an incentive, was as high as the revenue from REC negating the very objective. Besides, he added there was no differentiation in REC entitlement for RE power from wind or solar with no raw material cost unlike biomass.
M Komaraiah, managing director, Shalivahana Green Energy insisted that the developer should be adequately compensated by way of availing the clean development mechanism (CDM) benefits exclusively without sharing with any agency/ beneficiary. In Madhya Pradesh, Komaraiah informed that the state electricity regulatory commission has kept the tariff of their order in 2007 unchanged vide their revised tariff order 2012. Even it not considered the tariff regulations released by the Central Electricity Regulatory Commission while fixing the tariff for biomass projects. The current tariff was unattractive and also unviable.
Further, Komaraih gave examples of Madhya Pradesh and Odisha where inter state open access was not allowed. “Inter-state Open access is not allowed in Madhya Pradesh. Power Plants based on RE technologies are to be allowed for Open Access considering as Green Plants. On the other hand, due to high cross subsidy charges and wheeling charges, the Open Access is a virtual reality in Odisha. Similarly no open access is allowed by the state government in the disguise of Section -11of the Electricity Act, 2003,”
According to Komaraiah, the distribution companies in Odisha have proposed to increase the rate of cross subsidy surcharges as high as Rs.2.54 per unit thus making open access further difficult for the consumer and Industry. This was in turn an activity of suppressing the right of the consumer for open access in the disguise of higher open access charges.
Moreover, bio mass power producers have made a strong pitch for waiver of a clause relating to imposition of penalty for failure of certain level of plant load factor. They argued that this clause,which has been currently introduced by Odisha be waived as continuous maintenance of the plant load factor may not be possible as generation mainly depends upon the availability of bio mass which largely depends on rains in a particular year and place. The gross calorific value of the biomass widely varies from place to place, season to season and fuel to fuel.