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In an effort to make use of more renewable energy and minimise dependence on conventional sources, several states are revising their tariffs for feeding green energy into the grid.States such as Tamil Nadu, Gujarat, Madhya Pradesh, Andhra Pradesh and Rajasthan are planning to provide a better risk return ratio to attract more investments in renewables.

Tamil Nadu which presently purchases wind power at Rs 2.90 a unit is planning a hike as high as Rs3.40 a unit. States like Gujarat and Rajasthan have recently announced a hike in their power purchase rates. For instance, in January, Gujarat announced an increase in its wind power tariffs to Rs 3.50 a unit from Rs 3.37 a unit. Madhya Pradesh has also recently increased its wind power tariff from Rs 3.97 a unit to Rs 4.03 a unit.

The Central Electricity Regulatory Commission (CERC) is also finalising a separate tariff regulation for renewables. The
commission is working on a formula through which states can fix tariffs for sourcing renewable power."There is a need for uniformity in renewable power tariffs across the country. We are working on a standard tariff guideline through which the states can fix a uniform tariff in favour of the renewable power generating companies without impacting the consumer tariff," CERC chairman & CEO Pramod Deo said. According to Mr Deo, the guidelines will be tabled by July.

Inspite of generating a huge amount of a grid-interactive renewable power, there are still very less states in India that are
using renewable energy through power grids.

"There is a huge gap between demand and supply of grid-interactive renewable power. Even though power companies are capable of producing renewable power, most of the times they are unable to feed it into the grid because it is commercially unviable. The states are now trying to address this problem as they have to meet their energy demands," Indian Renewable Energy Development Agency (IREDA) chairman & managing director Debashish Majumdar said.


States decide the tariff based on several factors such as project cost, interest rates for the debt and capacity utilisation. However, the capacity utilisation factor varies depending on the availability of the renewable energy source.

States are now gearing up for a significant amount of renewable energy contribution in their grid power as the governments
planning to make it mandatory for states to use a certain quantum of renewable energy. States with no renewable energy sources would then have to buy renewable energy certificates from the ones that have surplus.

At present only 15 out of 28 states have set quotas for sourcing renewable energy for their grids, Mr Deo said. The gross
installed capacity of grid interactive renewable power in the country is estimated at 11,273 mw, which accounts for 8% of the country's installed generation capacity.

While total power capacity is estimated to be 2,00,000 mw by the end of the 11th plan, the government has set a target of
24,000 mw to come from renewable energy.


Source - Economic Times