New Tariff Rules Announced for Renewable Energy Industry

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Sept. 18 – India’s Central Electricity Regulatory Commission (CERC) has announced a new tariff regime aimed at encouraging more investment in the renewable energy sector.

The new tariff regime will offer 19 percent pre-tax return on investment in new projects for the first 10 years and 23 percent in the subsequent period says The Economic Times.

According to the CERC, the new regulations are different because they specify capital cost norms and fix tariff upfront for the whole tariff period.

The tariff permitted to a project under these regulations would apply for the whole tariff period, which is 13 years for wind power projects, 25 years for solar power projects and for small hydro (below 5mw) it has been kept as 35 years, a CERC official told The Economic Times.

The regulations will also account for normative capital costs for projects based on different renewable technologies so that they can be changed regularly as prices escalate. These regulations hope to spur more use of renewable resources of electricity as part of the India;s National Action Plan on Climate Change that pegs minimum renewable purchase standards need to be set at 5 percent  of the total power purchases by 2010.