KERC sets benchmark tariff for wind projects

The Karnataka Electricity Regulatory Commission (KERC) has fixed a generic tariff of Rs 3.74 per kWh for wind projects in the state, which will be applicable from March 31, 2018. KERC has proposed a debt-equity ratio of 70:30 for the tariff determination, and project costs of Rs 62 million per MW at a capacity utilisation factor of 28 per cent. For tariff determination, the regulatory commission has taken into consideration a 75 per cent domestic loan component and a 25 per cent foreign loan component. The average interest rate consideration for domestic and foreign loans will be approximately 9.23 per cent and the loan tenor will be 13 years. The project depreciation rate will be set at 5.38 per cent of the capital cost for the first 13 years, with the remaining depreciation spread over the balance useful life of the project. In addition, KERC has proposed a 16 per cent return on equity for wind projects with PPAs for 20 years, along with an extension option of five years.