Private companies pitch for preferential tariff model for green projects

The firms are of the view that the preferential route mode is more economically viable than the competitive bidding model

Private renewable energy firms are pitching for switching to the "preferential tariff" route from the current competitive bidding for future green power projects as they feel it is more viable.

According to a Power Ministry official, private power generation firms are asking the government to go back to the preferential tariff model for setting up renewable power projects.

Preferential Tariff is the tariff fixed by the Appropriate Commission for sale of energy from a generating station using renewable energy sources to a distribution licensee.

The official said the companies are of the view that the preferential route mode is more economically viable than the competitive bidding model.

As per the competitive bidding model, the firms quote lesser tariff than the threshold set by the regulator and the lowest bidder is awarded the project.

As per official estimates of the Ministry of New and Renewable Energy (MNRE), the total renewable capacity at the end of December 2013 was 29,989 MW.

Going forward, the government is expecting $100 billion investment in the renewable energy sector in the next four years as it firms up a new policy framework for the same.

The MNRE is currently working on a renewable energy policy to attract investments in the space by providing tax breaks and cheaper loans.