NLCIL’s Andaman Solar Plant With BESS To Offer Power At Rs 6.99/unit

NLCIL's Andaman Solar Plant With BESS To Offer Power At Rs 6.99/unit

The Central Electricity Regulatory Commission (CERC), in its latest judgment, approved the levelized tariff of Rs 6.99 per unit for NLCIL’s 20 MW solar power plant with a battery energy storage system (BESS) at Andaman. It contrasts the demand of Rs 7,434 per unit by NLC India Limited (NLCIL), which commissioned the project. 

The company had set up a 20 MW solar PV plant with 8 MWh BESS at Dollygunj and Attam Pahad in the Andaman and Nicobar Islands. NLCIL, in its petition before the CERC, asked the Commission to approve the levelised project-specific tariff of Rs 7.41 per unit with 100% Central Financial Assistance (CFA) and Rs 9.26 per unit with 15% subsidy for the project. 

It also pleaded to approve the auxiliary power consumption at 8.51%. It also asked the CERC to approve the additional expenditure incurred to deploy CISF and other security expenses. L&T was the EPC player for the project. A tripartite MoU was, meanwhile, signed between NLCIL, MNRE and the Andaman and Nicobar administration to undertake the project. The parties signed a revised power procurement agreement (PPA) on January 1, 2021. 

While hearing the plea, CERC approved a deviation in the RE Tariff Regulations 2017, which does not discuss BESS. “After going through the documents submitted by NLCIL, and with due regard to the special circumstances of the project located in Andaman & Nicobar Islands, the Commission considers it necessary to allow deviation and approves the auxiliary consumption of Solar Project with BESS as 8.51% of the gross generation as claimed by NLCIL along with degradation factor 1.00% for the first ten years and 0.7% for the remaining period,” the order said. 

The Commission, however, declined to approve the escalation of Operations and Maintenance (O&M) expenses for the next ten years at the rate of 5.72%. However, it allowed the same for departmental O&M expenses. 

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“There is no escalation applicable on such contracted price. In addition, the O&M for the first year after commissioning (warranty period) is the responsibility of the contractor. However, it is observed that an escalation of 5.72% shall be applicable on the departmental O&M expenses as submitted by NLCIL,” the order said. 

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NLCIL, meanwhile, had also asked for approval of Rs 3,104 lakh for the additional capitalization of battery replacement during the 12th year of the project life. CERC, in its order, said that as the battery life cycle is 10-12 years based on the technology used by the NLCIL, the battery replacement requirement would come after its project life. It thus ordered a reduction in the costs of the replacement of BESS. 

“Therefore, based on the above assumptions of technological change and the escalation rate of exchange, the Commission approves the cost of replacement of BESS as Rs 2951.47 lakh in the 12th year of the project life. However, considering the battery replacement, return on equity towards the old battery has not been allowed since the year of replacement,” the order said. 

In its final order of approving the final tariff, the CERC order read, “The Commission approves the levelized tariff of Rs. 6.99 per kWh as against the Petitioner’s claim of Rs. 7.434 per kWh with actual CFA received. NLCIL is hereby directed to raise bills for the energy generated from the project on the basis of the tariff approved as above.”