The Ministry of Power has written to the Central and State Electricity Regulatory Commissions to enforce tariff rationalisation for hydropower projects.
These measures are expected to bring down tariff for power generated from a new hydropower project, a Power Ministry notification said.
Tariff rationalisation measures include providing flexibility to the developers to determine tariff by back loading of tariff after increasing project life to 40 years. Increasing the debt repayment period to 18 years and introducing escalating tariff of 2 per cent are also included in these measures, the notification said.
“The levelised tariff over the useful life of the project may be calculated on the basis of the norms specified in the Central Electricity Regulatory Commission regulations,” the notification added.
The year wise tariff, for a long term power purchase agreement for the procurement of Hydro Power has been left at the discretion of negotiations between the project developer and the power distribution company.
The Power Ministry has also notified the Hydropower Purchase Obligation as a separate entity within the Non-Solar Renewable Purchase Obligation. This obligation will cover all large hydro power projects commissioned after March 8, 2019. The untied capacity (capacity without PPAs) of already commissioned projects will be able to avail this benefit.
All large hydro power projects have also been declared as renewable energy sources. But new hydro power projects will not automatically be eligible for any differential treatment for statutory clearances such as Forest clearance, environmental clearance among others.