Navigating Biomass Fuel Costs: Haryana’s Path To Fair And Transparent Pricing For FY 2024-25

The determination of fuel costs for biomass-based renewable energy power plants for the financial year 2024-25 is a critical issue. M/s. Star Wire (India) Vidyut Pvt. Ltd. has filed a petition for the determination of these costs based on an independent state-specific study. This study will consider prevailing market conditions and all incidental costs, such as transportation, handling, and other relevant factors. The Haryana Renewable Energy Development Agency (HAREDA) is responsible for conducting this study and considering objections and suggestions from various stakeholders.

The need for this petition arises from a previous direction by the Appellate Tribunal for Electricity (APTEL). APTEL, in its judgment, mandated that state commissions should periodically determine the variable charges for biomass-based power projects based on prevailing biomass fuel prices. These prices should be fixed after a state-specific study. The tribunal emphasized the importance of determining a fair and transparent fuel price to ensure the sustainability of renewable energy projects.

The Haryana Electricity Regulatory Commission (HERC) has previously addressed this issue in its orders. It is stated that the commission is in the process of issuing renewable energy regulations for the control period from FY 2021-22 to FY 2024-25. During this period, the tariff for energy supplied will be charged according to these regulations. The commission also decided that the fuel cost for projects commissioned before FY 2021-22 should be frozen at the FY 2020-21 levels. This decision aims to ensure that fuel costs remain aligned with prevailing market conditions.

The petitioner highlighted several issues with the current determination of biomass fuel costs. They pointed out that the cost determined by HERC for FY 2020-21 was arbitrarily fixed at ₹3,000 per metric ton, with an annual escalation of 2.93%. This fixation was considered unrealistic and unreasonable, ignoring the Central Electricity Regulatory Commission’s (CERC) determination of Rs. 3786 per metric ton with a 5% annual escalation for the same state. The petitioner argued that a state-specific study is necessary to determine the actual cost of biomass fuel in Haryana, considering factors such as crop patterns and biomass availability.

The petitioner also requested that the commission consider all incidental costs related to biomass fuel. These include transportation, chipping, handling, loss in gross calorific value (GCV) of fuel, and an increase in station heat rate (SHR). These factors are crucial for determining the actual fuel cost for biomass power plants. The petitioner emphasized that the current single-sided submissions by the Haryana Power Purchase Centre (HPPC) do not reflect the true market conditions.

Additionally, the petitioner has cited ongoing litigations related to the determination of fuel costs. They argued that these litigations highlight the need for a fair and transparent process. The petitioner urged the commission to conduct an independent state-specific study to determine the fuel cost for biomass plants for FY 2024-25.

In conclusion, the determination of fuel costs for biomass-based renewable energy power plants for FY 2024-25 requires a comprehensive and transparent approach. An independent state-specific study, considering all relevant factors and market conditions, is essential for ensuring the sustainability and fairness of renewable energy projects in Haryana. The commission’s decision on this matter will have significant implications for the future of biomass-based renewable energy in the state.

Please view the document here for more details.