Bandula S. Tilakasena

1
Pricing policy for renewable energy Avoided Cost
based Tariff
Bandula S. Tilakasena Project Director
Trincomalee Coal Power Project Ceylon
Electricity Board 21 October, 2007
2
Introduction

• Classification of Renewable Energy
• Main Features of the current Standardized Power
  Purchase Agreement (SPPA)
• Tariff based on CEBs avoided costs
• Historical trends

3
Classification of Renewable Energy Plants

• Grid Connected Connected to the integrated
  electricity distribution grid and deliver
  electricity exclusively to the grid
• Self Generating Connected to the grid and while
  delivering electricity to the grid, a part of the
  electricity generated is used by the developer
• Off- Grid Operate in isolation

4
Standardized Power Purchase Agreement
Eligibility

• Capacity Limit Less than 10 MW
• Energy produced from
• Mini Hydro
• Bio mass
• Cogeneration

CEB/SPPA.bst
5
Standardized Power Purchase Agreement Main
Features

• All energy produced by the Facility will be
  purchased by CEB
• The power plant is not subject to dispatch
• The Power Purchase tariff is based on the Avoided
  Costs of CEB, and is announced each year

6
Standardized Power Purchase Agreement Main
Features

• The cost of transmission interconnection has to
  be borne by the Developer
• Electrical interconnections to comply with the
  CEB Guide for Interconnection of Embedded
  Generators December 2000
• The floor tariff over the term is 90 of the
  initial year Tariff

7
Tariff calculation methodology - Step 1
Calculate the cost of a unit generated by each
plant in operation using applicable fuel costs
and other plant data such as heat rates.
8
Tariff calculation methodology - Step 2

• Compute the expected plant factors for each month
  in the year under consideration using projections
  prepared by CEBs System Control Centre.

9
Tariff calculation methodology- Step 3

• Calculate the fraction of time that each plant
  operates in the margin during a given month using
  the expected monthly plant factors.

10
Seasonal Tariff Step 4

• Estimate the avoided costs for wet and dry
  seasons separately by taking the arithmetic
  average of the months in each season
• Allowances made on account of Transmission Losses
  and Overheads incurred by CEB

May -January
February ,March-April
11
Tariff calculation methodology - Step 5

• Allowances made on account of Station Losses,
  Transmission Losses and overheads incurred by CEB
  are as follows
• Station Losses 3.0
• Transmission Losses 3.2
• CEB Overheads 1.5

12
Tariff calculation methodology - Step 6

• Tariff offered each year is the arithmetic
  average of
• Avoided cost of generation for the year,
  calculated according to the methodology described
  above, and
• Avoided costs of generation used for estimating
  the price offered in the previous two years

13
Tariff calculation work sheet for year 2007

• Tariff Calculation Sheet

14
Variations of SPPA tariff 1996-2007 Rs/kWh
Year Dry Season Wet Season
1996 2.90 2.90
1997 3.38 2.89
1998 3.51 3.14
1999 3.22 2.74
2000 3.11 2.76
2001 4.20 4.00
2002 5.13 4.91
2003 6.06 5.85
2004 5.70 4.95
2005 6.05 5.30
2006 6.73 5.82
2007 7.64 6.94
15
Variations of SPPA tariff 1996-2007 Rs/kWh
16
Thank You
Energy Purchases Branch Transmission
Division Ceylon Electricity Board Web www.ceb.lk