Ministry Fixes Annual Five Per Cent Escalation Clause
The per unit rate for thermal and large hydel plants ranges between Rs 1.0 and 2.0 per unit depending upon when the plant was set up. No one, however, has a yearly escalation clause like what the ministry has suggested. Considering the capacity of power generated from non-conventional sources is very small, the high tariff is facing opposition from many state governments. The ministry rate will apply to electricity generated through solar, small hydel projects and wind energy.
Ministry sources, however, are confident the rate will not be a barrier as its intention is to promote the exploitation of energy through this means. Besides, the government had recently allowed 51 per cent foreign investment in non-conventional energy. This new development should make the sector attractive to foreign investors.
According to ministry records, there is already an installed capacity of 684 mw in private sector non-conventional energy projects. This is out of a total capacity of 732 mw, the balance being public sector and demonstration projects.
Since there is no pollution penalty from wind, solar and small hydel generated power, this area should be more attractive for foreign investors and for the environment.
Sources said the high rate was intended to make the sector attractive to investment. Along with the high power purchase rate, some incentives were available like a five-year tax holiday, 100 per cent accelerated depreciation, exemption of customs duty on 10 specified components and concessional duty of 25 per cent on full wind energy generator.
Out of all the states, Tamil Nadu has accepted all the suggestions of theministry on the power purchase price, the annual five per cent escalation clause. In fact, it purchases power at Rs 2.75\kwh, Rs 0.50 more than the ministry suggested rate. It already has a large wind energy farm set up by NEPC-MICON, a member of the Khemka group.
The ministry says private sector projects in nine states have fed 675 million units into state grids till March 1996. Besides fresh projects totalling 600 mw installed capacity are in various states of completion.
A fresh wind energy survey has been commissioned in peninsular India and in the mountainous regions of Himalayan and sub-Himalayan region. The results of the survey should open up new areas for wind energy exploitation. >