- 1. Tariff Determination for Hydro Power Plant Krishnakumar R V M.E Power Engineering & Management Anna University, Chennai
- 2. General Concepts (i) Additional capitalization Additional capitalisation means the capital expenditure incurred or projected to be incurred, after the date of commercial operation of the project and admitted by the Commission. (ii) Auxiliary energy consumption The quantum of energy consumed by auxiliary equipment of the generating station, and transformer losses within the generating station, expressed as a percentage of the sum of gross energy generated at the generator terminals of all the units of the generating station. 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 2
- 3. General Concepts Contd., (iii) Capital cost Capital Cost for a Project includes the expenditure incurred or projected to be incurred, including interest during construction and financing charges, any gain or loss on account of foreign exchange risk variation during construction on the loan. (iv) Date of Commercial Operation’ or ‘COD’ The date declared by the Generating company after demonstrating peaking capability corresponding to Installed capacity of the Generating station through a successful trial run, after notice to the beneficiaries. 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 3
- 4. General Concepts Contd., (v) Debt-Equity Ratio Debt–Equity ratio as on the date of commercial operation shall be considered as 70:30 for determination of tariff. However, if the Equity employed is more than 30%, the amount of Equity for determination of tariff would be limited to 30%. Also, if the actual equity employed by the developer is less than 30%, the actual Debt and Equity would considered for determination of tariff. (vi) Declared capacity The capability to deliver ex-bus electricity in MW declared by such generating station in relation to any time-block of the day or whole of the day, duly taking into account the availability of fuel or water, and subject to further qualification in the relevant regulation. 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 4
- 5. General Concepts Contd., (vii) Design energy Design energy means the quantum of energy which can be generated in a 90% dependable year with 95% installed capacity of the Hydro generating station. (viii) Operation and Maintenance expenses The expenditure incurred on operation and maintenance of the project, or part thereof, and includes the expenditure on manpower, repairs, spares, consumables, insurance and overheads. (xii) Plant availability factor (PAF) The average of the daily declared capacities (DCs) for all the days during that period expressed as a percentage of the installed capacity in MW reduced by the normative auxiliary energy consumption. 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 5
- 6. General Concepts Contd., (viii) Normative Annual Plant Availability Factor (NAPAF) Normative annual plant availability factor (NAPAF) for Hydro generating stations is determined by the Commission as per the following criteria: (a) Storage and Pondage type plants with head variation between Full Reservoir Level (FRL) and Minimum Draw Down Level (MDDL) of up to 8%, and where plant availability is not affected by silt : 90% (b) Storage and Pondage type plants with head variation between FRL and MDDL of more than 8%, where plant availability is not affected by silt : (Average head / Rated head) + 0.02 (c) Pondage type plants where plant availability is significantly affected by silt: 85%. (d) Run-of-river type plants: NAPAF to be determined plant-wise, based on 10-day design energy data, moderated by past experience where available/relevant. 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 6
- 7. General Concepts Contd., (xiii) Capacity Index (CI) Capacity Index (CI) = {Declared Capacity (MW) / Maximum Available Capacity (MW)} x 100 Where, Declared Capacity (DC) is the power that is expected to be generated next day based on availability of water & machine; and Maximum Available Capacity (MAC) is the maximum power that a station can generate with all units running, under the prevailing water levels and flows over the peaking hours next day. 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 7
- 8. Components of Fixed Charge 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 8
- 9. Interest on Working Capital 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 9
- 10. Capacity Charge Capacity Charge (Rs) = AFC x 0.5 x NDM / NDY x (PAFM / NAPAF) • AFC (Rs) = Annual fixed cost as specified by the Commission for the year • NAPAF = Normative Plant availability factor, in percentage • NDM = Number of days in the month • NDY = Number of days in the year • PAFM = Plant availability factor achieved during the month, in Percentage 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 10
- 11. Capacity Charge Contd., PAFM = 10000 X ∑ DCi / {N x IC x (100 – Aux)}% • AUX = Normative auxiliary energy consumption in percentage • DCi = Declared capacity (in ex-bus MW) for the ith day of the month which the station can deliver for at least three (3) hours • IC = Installed capacity (in MW) of the complete generating station • N = Number of days in the month 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 11
- 12. Energy charges • The Energy charge are payable by each beneficiary for the total energy scheduled to be supplied to the beneficiary Total Energy charge payable to the generating company for a month: (Energy charge rate in Rs./kWh) x {Scheduled energy for the month in kWh} x (100 – FEHS) / 100 Energy charge rate = AFC x 0.5 x 10 / {DE x (100 – AUX) x (100 – FEHS)} Where, • DE (MWh) = Annual design energy specified for the Hydro generating station • FEHS (%) = Free energy for the home State • CERC has capped the Energy charge rate at Rs 0.80/Unit 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 12
- 13. Tariff determination for a 500 MW Hydro Power Plant 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 13
- 14. Calculations Return on equity 1. Capital cost/MW= Rs. 6 Cr 2. Capital cost for 500 MW = 500 x 6= Rs. 3,000 Cr. 3. Normative Debt/Equity Ratio= 70:30 4. Equity = 30/100 X 3000 = Rs. 900 Cr. 5. Debt =70/100 X 3000 = Rs. 2, 100 Cr. RoE = 15.5% of Equity = 15.5/100 x 900 = Rs. 139.50 Cr. 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 14
- 15. Calculations (2) Interest on Loan 10% of Debt=10 /100 x 2100 =Rs. 210 Cr. (3) Interest on Working capital 10% of Working capital (Rs. 300 Cr.) 10/100 x 300 = Rs. 30 Cr. (4) Depreciation 5.28% of Capital cost= 5.28/100 x 3000= Rs. 158.40 Cr. • (5) O & M Cost • Normative O&M Cost: 2% of Project Cost • 2% x 3000 = Rs. 60 Cr • Hence, Total Fixed cost = (1) + (2) + (3) + (4) + (5) • = Rs. (139.50+210+30+158.40+60) = Rs. 597.90 Cr. = Rs. 597.90 x 107 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 15
- 16. Calculations Contd., Annual Energy generation Gross Energy generated in the Year 500 MW = 500 x 365 x 24 x 90 x 1000/ 106 = 3942 Million Units (MUs) = 3942 x 106 Units Auxiliary consumption: 1% Net Annual Energy generation: =Gross energy x (1 – Aux consumption) = 3942 x 106 x (1 - 1%) = 3902.58 x 106 Units 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 16
- 17. Calculations Contd., Fixed cost per unit Fixed Cost/Unit = (Total Fixed Cost) / (Net Annual Energy generation) = (597.90 x 107) / (3902.58 x 106) = Rs 1.53 / kWh Nominal Tariff: Nominal Tariff = (Fixed Cost / Unit) + (Variable cost /Unit) = Rs (1.53 + 0)/Unit = Rs. 1.53/Unit 8/1/2017 DeptOfPowerEngg&Mgmt,AnnaUniversity, Chennai 17