Government mulls introducing fixed-cost component in renewable energy tariff

The MNRE is planning to add a fixed-cost component to the tariff for electricity generated from renewable energy sources. The move is aimed at preventing distribution companies from backing down from procuring power generated by such projects, as they will have to pay the fixed tariff component even if they do not buy the electricity contracted for. Such a tariff mechanism already exists for electricity from conventional sources such as coal and gas, which has two parts — a fixed cost, which entails the investment for power generation equipment and a variable cost or the cost of fuel.