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Pricing policy for renewable energy - Cost Based Technology Specific Tariff. Eng. K A Noel Priyantha Chief Engineer (Renewable Energy) Ceylon Electricity Board 21 October, 2007. Introduction. Principles of tariff fixing - PowerPoint PPT Presentation
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Eng. K A Noel PriyanthaChief Engineer (Renewable Energy)
Ceylon Electricity Board
21 October, 2007
Pricing policy for renewable energy
- Cost Based Technology Specific Tariff
IntroductionIntroduction Principles of tariff fixing
Cost based, technology specific & three
tiered tariff calculation methodology
Tariff applicable for year 2007
Principles of tariff fixing
Cost based, technology specific & three
tiered tariff calculation methodology
Tariff applicable for year 2007
Principles of Tariff FixingCost based , technology specific and
three tiered tariff
Tier 1: Years 1- 6
Tier 2: Years 7 – 15
Tier 3: Years 16 - 20This tariff will be limited to small power
producers ( Capacity up to 10 MW)CEB pays only 90 % of the avoided cost Any difference will be provided by the GOSL
through Sustainable Energy Authority (SEA)
Principle of Tariff Fixing
This tariff have been designed to eliminate the problems of negative cash flows experienced by many small power producers during the period of loan repayment.Tariff will be revised once a year due to rapid changes in the project costs, exchange rates and interest rates, etc. 20 year term of the power purchase
agreement
Three tier tariff estimationCapital costs used for the tariff
calculation in year 2007
Technology SL Rs. Million/MW
Small Hydro 121
Wind 158
Biomass 147
Three tier tariff estimationPlant factors used for the tariff
calculation in year 2007
Technology Annual Plant Factor
Small Hydro 43 %
Wind 32 %
Biomass 80 %
Three tier tariff estimation
• O&M rates as a percentage of the capital cost (base value)• O&M rates as a percentage of the capital cost (base value)
Technology Year 1 - 15 Year 16 onward
Small Hydro 3 % 3 %
Wind 3 % 3 %
Biomass 4 % 5 %
Three tier tariff estimation
• applicable O&M base value for 2007 in SLRs./kWh• applicable O&M base value for 2007 in SLRs./kWh
Technology Year 1 - 15 Year 16 onward
Small Hydro 0.96 0.96
Wind 1.69 1.69
Biomass 0.84 1.05
Three tier tariff estimationEscalation of O & M. This will be calculated using the average of Sri Lanka Consumer Price Index (SLCPI) rates of change and SLRs/USD rates of change for the five preceding years.
Source for SLCPI & SLRs/USD – Central bankThe five year average SLCPI – 8.75
Depreciation of rupee against the USD – 6.11%
Applicable O & M escalation rate – 7.43 %
Three tier tariff estimation
Debt equity ratio - 60:40Interest rate - 12.45%Loan repayment - 6 yearsConstruction period - 2 yearsDiscount rate - 16.27%
Return on equity - 22 %
Three tier tariff estimationThird Tier
The base rate will be 1.00 SLRs./kWh as of year 2007.
This will be escalated at a rate of 2/3 of O & M escalation rate ( 7.43 %)
Three tier tariff estimationBiomass fuel cost escalation
The base fuel cost - 5.00 SLRs./kWh for 2007.
This will be escalated at a rate of 2/3 of O & M escalation rate ( 7.43 %)
Three tier tariff estimationRoyalty to GOSL
10% of generation as royalty for mini hydro and wind projects from 16th year
Cost based tariff for 2007 SLRs/kWh
Technology Escalable Escalable
Base O&M (year 1-20)
Base Fuel (year 1-20)
Year 1-6 Year 7-15 Base Tariff
Mini-hydro 0.96 none 8.28 3.07 1.00Wind 1.69 none 14.52 5.39 1.00Biomass 0.84 5.00 5.40 2.01 1.00Escalation per year from 1st January after the commercial operation date 7.43% 4.95% 4.95%
Royalty to Govt, paid direct by the power
purchaser10% of total tariff10% of total tariff
No royalty
Non-escalable fixed Escalable Year 16+
Interpretation of the cost based tariff 2007(based on the escalation rates applicable for year 2007)
0
2
4
6
8
10
12
14
16
18
20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Year of Commercial Operation
All I
nclu
siv
eT
ariff
Paid
(LK
R/k
Wh)
Mini-hydro
Wind
Biomass
Thank YouEnergy Purchases
Branch
Transmission Division
Ceylon Electricity Board
Web: www.ceb.lk