Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION … 58 42/Order_104_of_2010_27_Dec_20… · Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre

MERC_[Case No. 104 of 2010] Page 1 of 23

Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

World Trade Centre, Centre No.1, 13th

Floor, Cuffe Parade, Mumbai 400005.

Tel. 022 - 22163964/65/69 Fax 022 - 22163976

Email: [email protected]

Website: www.mercindia.org.in / www.merc.gov.in

Case No. 104 of 2010

In the matter of

Petition filed by M/s. Ankur Scientific Energy Technologies Pvt. Ltd. for

determination of Tariff for procurement of power by distribution licensees from

Biomass based power generating company in the State of Maharashtra using

Gasification route (Otto-Cycle) and exemption from the zoning / overlapping

policy for power plants of up to 2-MWe size.

Shri. V.P. Raja, Chairman

Shri. Vijay L. Sonavane, Member

M/s.Ankur Scientific Energy Technologies Pvt. Ltd. .….Petitioner

Address: Ankur, Near Navrachana School, Sama,

Vadodara – 390 024 (Gujarat).

Maharashtra Energy Development Agency …..Respondent

Address: 2nd

Floor, MHADA Commercial Complex,

Opp. Tridal Nagar,

Yerwada, Pune 411006.

mailto:[email protected]


Present during the hearing:

For the Petitioner: Shri. Ankur Jain, Executive Director

Shri. Ashok Chaudhuri, General Manager

For the Respondent

(MEDA):

Shri. S. A. Patil, General Manager

Shri. Paresh Bodhe, Project Officer.

ORDER

Date: 27 December, 2012

M/s. Ankur Scientific Energy Technologies Pvt. Ltd. (hereinafter referred to as

‘the Petitioner’) filed a Petition on affidavit under Regulation 7 (7.1) of MERC (Terms

and Conditions for Determination of RE Tariff) Regulations, 2010, before the

Commission on 16 December 2010 (removed deficiency on 28 December, 2010) for

determination of Tariff for procurement of power by distribution licensees from biomass

based power generating company in the State of Maharashtra using gasification route

(Otto-Cycle) and exemption from the zoning / overlapping policy for power plants of up

to 2-MWe size.

2. The prayers of the Petitioner are as follows:

“

a. Determination of the Tariff for Biomass Gasifier Power Plants rated up to

2MW (net feed into the grid) at INR 6.50 per kWh.

b. Approval to the petitioner for setting up the Power Plants at their two sites.

c. Exemption from the zoning policy of Biomass Gasifier based Power

Plants rated up to 2- MWe (net feed into the grid).”


3. The Petitioner in its Petition submitted as follows;

3.1 The Commission vide Order dated 14 December, 2009 in Case No. 83 of 2008 has

fixed the Tariff of Rs. 4.98/kWh for biomass power projects based on Rankine cycle

technology. However, there is no Tariff fixed by the Commission for biomass power

projects based on gasification (Otto cycle) route. Further, Regulation 7 (7.1) of MERC

(Terms and Conditions for Determination of RE Tariff) Regulations, 2010 provide the

norms for determination of project specific Tariff on case to case basis. The Petitioner,

inter alia, is praying for a suitable Tariff for their projects based on gasification (Otto-

cycle) technology and wishes to justify the request for a higher Tariff as compared to the

Commission’s determined Tariff for biomass power project based on Rankine Cycle

technology.

3.2 The Petitioner submitted that, while determining the Tariff for the biomass based

power project, it is essential to consider the financial and operational parameters, as

follows;

3.2.1 Capital cost including Evacuation Cost:

It is essential to consider the capital cost while determining the Tariff for biomass

power projects based on gasification route (Otto cycle). The capital cost of the

biomass gasifier based power plants compromises the cost of;

i)The gasifier and its accessories ii) 100% producer gas based engine generator set,

iii) transformer and associated equipments, iv) land and its development including

the civil constructions, v) processing fees of the nodal agency, vi) erection and

commissioning charges, vii) pre-operative expenses and other assets. The above

components are grouped and the entire gross capital project cost would be around

Rs. 6.50 crores/MW including the cost of project switch yard and

interconnection facilities at the site up to the point of energy metering. It does not

include the cost of the transmission lines and associated facilities beyond the point

of energy metering at the project switch yard for the evacuation. Even after

considering the Central Financial Assistance (CFA) from MNRE of Rs. 1.50

crore/MW, net project cost will be Rs. 5 crore/MW.


3.2.2 Tenure of Loan:

The Petitioner has considered the tenure of loan as 10 years which is in line with

MERC (Terms and Conditions for Determination of RE Tariff) Regulations, 2010.

3.2.3 Interest on Loan:

The Petitioner has considered interest rate at 13.79% per annum.

3.2.4 Return on Equity:

The Petitioner has considered the rate of return on equity at 19% per annum for the

initial 10 years and thereafter at 24% for the subsequent 10 years.

3.2.5 Life of the Plant and Machinery and Agreement Period:

Life of the plant, machinery and the agreement period is considered as 20 years.

3.2.6 Depreciation:

Depreciation is apportioned for 20 years with 10% residual value.

3.2.7 Debt-Equity Ratio:

The Petitioner has considered the debt-equity ratio of 70:30 for the capital

investment.

3.2.8 Operation and Maintenance Expenses:

The Petitioner has considered the O&M cost including insurance cost at the rate of

9.5% of the gross project cost for the first year. Gasifier maintenance cost at 1.5%

of the project cost, 6% for the engine and 2% for the manpower. Escalation at the

rate of 5.72% on operation and maintenance year on year has been considered.

3.2.9 Interest on Working Capital:

The fuel storage requirement depends on the factors such as types of fuel and their

availability on a continuous basis round the year, the availability of storage

facilities, procurement arrangements and the price during the season / off-season

etc. Apart from the fact that the agriculture and the forest residues are seasonal and

would require storage for longer period. Therefore, the Petitioner has considered


the following items as components of working capital for the purpose of interest on

working capital at the rate of 12%.

a) Fuel stock of 120 days.

b) O&M expenses for one month plus stores and spares @ 15% of annual

O&M cost.

c) Receivables equivalent to one month charges for sale of electricity.

3.2.10 Plant Load Factor:

The Petitioner has considered the plant load factor as 75% so as to stabilize and

operate the plant at optimum level from first year.

3.2.11 Auxiliary Energy Consumption:

The auxiliary consumption for the plant is 12% of the gross energy generation.

3.2.12 Station Heat Rate (SHR):

The Petitioner has considered SHR as 3722 kcal/kWh and thus the biomass

consumption per unit of generation will be 1.05 kg.

3.2.13 Fuel Related Assumptions:

i) Fuel mix and types:

The Petitioner intends to use the different kinds of biomass as per seasonal

availability, mainly agricultural residues and wastes such as cotton stalks, soya

stalks, pulses stalks, chilly stalks, corn cobs and if required other woody biomass

wastes like Prosopis Juliflora’s fallen branches, twigs and firewood wastes from

private land / forest owners or saw mill suppliers. The Petitioner further submitted

that the coal cannot be used as a fuel for gasification technology.

ii) Gross Calorific Value (GCV):

The Petitioner states that, the various types of biomass have the different types of

calorific values and their availability also varies from season to season. Hence the

Petitioner has considered the weighted average calorific value of the available


biomass fuel sources to be around 3461 kcal/kg and the expected consumption of

1.05kg/kWh.

iii) Price of the Fuel:

The price of the fuel with 35% moisture content is assumed at Rs. 2000 per tonne.

Therefore, the cost with the 20% moisture content would be around Rs. 2353 per

tonne. Further the sizing and the storage cost including losses would be Rs. 400 per

tonne. Thus, the total cost would be Rs. 2753 per tonne. The price of the fuel has

been taken to be Rs. 2,800 per MT (rounded off) with an escalation of 5% per

annum.

3.2.14 Tariff:

Based on the above parameters, the Petitioner arrived at a levellised Tariff of

Rs.6.50/kWh.

3.2.15 Exemption from Zoning:

The Petitioner submitted that, a zoning policy exists in Maharashtra state i.e.

biomass collection area for a biomass project should not be overlapped with

biomass collection area of other biomass projects. Furthermore, the small

gasification based projects of 1-2 MWe capacity should be exempted from such

zoning policy in light of the relatively smaller and manageable biomass

requirements. The Petitioner thus requests the Commission to exempt Biomass

gasification based projects of around 2 MWe levels from the zoning policy with

freedom to locate such projects as per the assessments of the individual investors.

3.2.16 Advantages of the 2 MWe Biomass Gasification Power Plants:

i) The technology is reliable and user friendly with very high PLF’s of 75%.

ii) Gasification converts low quality fuel into use of the high quality fuel which is

convenient and combustible gaseous fuel.

iii) There are no any harmful effluents from gasifier, so it also reduces the threat

of global warming.

iv) Energy security through optimal utilization of locally available biomass

resources.


v) Tail end generation will provide grid stability, stable voltage and reduce the

need for enhancing the capacity of T&D networks to meet growing electricity

consumption needs.

vi) More equitable distribution of economic development and creation of large

scale employment for unemployed / partially employed rural people.

4. Based on the above Petitioner’s submission, the Commission vide notice dated 28

January, 2011 fixed the First Technical Validation Session (TVS) on 15 February 2011 in

the office of the Commission.

5. First Technical Validation Session (TVS):

5.1 The first TVS in this matter was held on 15 February 2011. Shri.Ankur Jain,

Executive Director & Shri. Ashok Chaudhuri, General Manager were present on

behalf of the Petitioner. They made a power point presentation before the

Commission during TVS, which covered the various aspects such as proposed

technology concepts, details of two proposed sites, capital cost of the project and

proposed Tariff etc.

5.2 Further, during TVS the Petitioner submitted amended Petition to the

Commission with the following prayers;

“In facts and circumstances stated here in above, it is, therefore, evident

that Biomass Gasifier based on Otto-cycle deserves a higher electricity

Tariff than Rankine cycle based technology, therefore it is most

respectfully prayed that this Hon’ble Commission may be pleased to pass

an order for;

1. Determination of the Tariff for Biomass Gasifier Power Plants rated

upto2-MWe (net feed-into the grid).

2. Approval to the Petitioner for setting up the power plant for their two

sites.

3. Exemption from the zoning policy of the Biomass Gasifier based

Power Plants rated upto 2-MWe (net feed-into the grid).”

5.3 Shri. P.V.Tayde, Manager & Shri. Paresh Bodhe, Project Officer, were present

on behalf of MEDA submitted their views as follows;


i. The Petitioner has quoted the project cost as Rs 6.5 crore / MW inclusive

of evacuation cost, which after the internalization with the central

subsidy, arrives at Rs.5 crore / MW, close to the per MW cost of the

Rankine cycle (Combustion Route) biomass based power projects.

ii. The generic Tariff declared for the combustion route Biomass power

project is Rs.4.98 / kWh. It is felt that same Tariff may be adopted in this

case also.

iii. MEDA has complied with the Commission’s Order dated 8 August,

2005 and not allotted any site to biomass power project that is falling in

the collection area of the other big size biomass power project.

iv. In this case the Petitioner has asked for two proposed sites located in Tal.

Bhivapur, Dist. Nagpur & Tal. Kalam, Dist. Yavatmal. Both the sites are

falling under the collection areas of already commissioned biomass

power projects (combustion route).

v. In order to avoid over-lapping in collection areas, MEDA can encourage

small size (upto 2MWe) biomass power projects using either Otto-cycle

or Rankine technology for vacant Talukas (121 Nos.) by way of calling

Expression of Interest (EOI) from interested parties.

5.4 The Commission observed that there is a need for in-depth study on zoning

procedure. Further, the Commission directed the Petitioner to explore the possibility

of taking up Research & Development (R&D) help from nearby Agricultural

University i.e. Punjabrao Krushi Vidhyapeeth, Akola.

6. Second Technical Validation Session (TVS):

6.1 The second TVS in this matter was held on 11 March, 2011. Shri.Ankur Jain,

Executive Director & Shri. Ashok Chaudhuri, General Manager was present on behalf

of the Petitioner. They made a power point presentation before the Commission during

TVS which covered the various aspects such as field survey; details of biomass

assessment report for proposed sites, crop production statistics and district wise

biomass based power plants etc.


6.2 Shri. S. A. Patil, GM and Shri.Paresh Bodhe, Project Officer were present on

behalf of MEDA and submitted their view’s as follows;

i) MEDA would like to assess the comprehensive quantity of biomass available at

the Petitioner’s proposed sites. Further, MEDA requested the Commission for

two months time to submit their findings.

ii) The generic Tariff declared for the combustion route biomass power project is

Rs.4.98 / kWh. It is felt that same Tariff may be adopted in this case also.

iii) MEDA has complied with the Commission’s Order dated 8 August, 2005 and

not allotted any site to biomass power project that is falling in the collection area

of the other big size biomass power project. Both the Petitioner’s two proposed

sites located in Tal. Bhivapur, Dist. Nagpur and Tal. Kalamb, Dist. Yavatmal,

fall under the collection areas of other biomass power projects.

iv) In this case, the surplus biomass is not available in their proposed sites; the

Petitioner may consider opting for alternate sites.

6.3 After hearing the parties, the Commission is of the view that, MEDA has to give

the data in support of the claim of the Petitioner to take a decision. MEDA being the

State Nodal Agency for Renewable Energy Sources in the State of Maharashtra and

keeping in view of zoning policy, the Commission directed MEDA to submit the

quantum of biomass available at the two proposed sites of the Petitioner and host the

vacant Talukas and Zones available with necessary biomass data at their website to

facilitate the developers for further setting up of biomass plant in the state of

Maharashtra.

7. In line with the above directives of the Commission, MEDA vide its letter

dated 28 March 2011 submitted its comments as follows;

7.1 As per MERC Order dated 8 August 2005, MEDA has allotted the biomass

collection area to various independent biomass power projects in the State. This

approach has been helpful in preventing unhealthy competition among the developers

and reducing the risk of the rise in biomass prices.


7.2 MEDA has conducted biomass assessment studies in nearly 40 Talukas. It is to

be noted that, there is a power potential of 2 MW to 2.5 MW in each Talukas. This has

assisted in allotting 4 to 5 Talukas to each project of about 8 to 10 MW capacity.

7.3 MEDA has entered in to MoU with the biomass developers on the condition of

non-overlapping in collection areas. In the light of this, the developer is not supposed

to intrude into the biomass collection area of other / adjacent biomass power project

holder.

7.4 Availability of the biomass being seasonal, it is felt that the sustainability of the

projects may be evaluated preferably assuming that 50 % of the total available biomass

will be available for the project and accordingly the project capacity can be decided, it

will avoid unhealthy competition and risk of rise of prices of biomass.

7.5 The biomass availability data produced by the Petitioner is based on the total

biomass generated while the consumption part has not been considered. Therefore the

data submitted is incomplete and cannot be accepted. It is necessary to assess the

surplus availability of biomass in the region by undertaking the field study.

7.6 The biomass linkage shown by the Petitioner by furnishing the supply

agreements executed with the farmers may not prove to be sufficient to cater the needs

of fuel up to the life of the project.

7.7 In addition to the above, the biomass developer may be asked to seek No

Objection Certificate (NoC) from the biomass developers who are already allotted with

the collection areas for the establishment of the new project. If the same is not possible

then the developers can be asked to setup a new project in the Talukas that are vacant

in the State.

7.8 If the gasifier based (Otto cycle) grid connected biomass power projects are to

be promoted, more demonstration projects of this technology have to be commissioned

in the state. The Commission in its earlier Order dated 30 December 2010 in Case No.

39 of 2010 directed M/s. Forbes and Company to set up 1 MW size biomass power

project based on gasification route in the state and asked to submit the technical and

commercial data to them for determination of Tariff.


7.9 In spite of the above, if the developer intends to set up projects in the Talukas

which are already allotted to the other biomass developers, then the developers to

whom the talukas are allotted as collection areas may also be invited for the next

hearing.

8. The Commission vide notice dated 15 March 2011 scheduled the first hearing

in the matter on 6 April 2011 in the office of the Commission.

9. First Hearing:

9.1 The first hearing in this matter was held on 6 April 2011. Shri. Ashok

Chaudhuri appeared on behalf of the Petitioner submitted that the biomass is available

in amply quantities for their proposed biomass power projects. Further, he mentioned

that the biomass assessment report for establishment of 1.5 MW biomass power plant

on gasification technology, duly certified by Divisional Statistician, C/o, Divisional

Joint Director of Agriculture, Nagpur Division and sample data of biomass supply

agreement with the local farmers has also been submitted to the Commission.

9.2 Shri. S. A. Patil, GM, appeared on behalf of MEDA, submitted that the

biomass collection areas as mentioned by the Petitioners have already been allotted to

other biomass developers. Also the biomass availability data produced by the

Petitioners is based on the total biomass generated but the consumption part of it is not

considered. Further, the biomass linkage being shown by the Petitioners by furnishing

fuel supply agreements executed with the farmers may not prove to be sufficient to

cater the needs of fuel up to life of the project. Therefore, it is necessary to assess the

surplus availability of biomass in the region by undertaking field survey, for which he

requested the Commission to allow MEDA for two months time duration to complete

the above task.

9.3 Shri. Prashant Joshi, CEO, M/s. GMT Mining & Power Pvt. Ltd. submitted that

MEDA has allotted Kuhi, Mauda, Umred and Bhiwapur Talukas to its proposed

biomass based power project. In view of this, the biomass collection areas which were

already allotted to them, if the same collection areas are allotted to other biomass

power project developers, then the price of the biomass shall be escalated certainly and

predominantly.


9.4 Having heard the parties and considering the paucity of time, the Commission

directed MEDA to submit the necessary information regarding quantum of biomass

available at Petitioner’s two proposed sites, to the Commission by the end of April,

2011 to ascertain the feasibility of the project at proposed sites. The Commission also

directed M/s. GMT Mining & Power Pvt. Ltd. to submit their views through proper

intervening application. Further, the Commission directed that the next hearing shall

be scheduled only after the receipt of necessary data from the MEDA.

10. M/s. GMT Mining and Power Ltd. and M/s. Yash Agro Energy Ltd. submitted

their intervening applications vide their letters dated 2 July, 2011. M/s. GMT Mining

and Power Ltd. submitted its views which are as under;

10.1 In the view of the relief claimed in the present Petition especially with

reference to the plant site at Tal. Bhivapur, Dist. Nagpur is concerned; the

applicant is the company which would be adversely affected by the decision in

the present Petition.

10.2 The intervener company has proposed 10 MW biomass based power (Rankine

cycle) plant in Tal. Kuhi, Dist. Nagpur. MEDA has granted approval in favor

of the intervener company as per the letter dated 3 June 2009. Subsequently,

the following action is already taken by the intervener company towards the

establishment of its 10 MW biomass based power plant in Tal. Kuhi, Dist.

Nagpur.

i) Possession of the 15 acre of land has been taken and compensation has

been paid for the same.

ii) The project has been approved by the MEDA and all statutory

clearances / permissions have been obtained by the intervener.

iii) Total project cost is Rs. 56 crore and orders along with the advance

payments have been placed for the procurement of the turbine, boiler

and cooling tower.

iv) As the power plant of the intervener is biomass based plant, MEDA has

stipulated the catchment area for procurement of Biomass for the

Intervener as under;


a) Tal. Kuhi Dist. Nagpur

b) Tal. Bhivapur Dist. Nagpur

c) Taluka Umrer Dist. Nagpur

d) Tal. Mauda Dist. Nagpur

10.3 It is submitted that the Commission was pleased to take into account the fact

that the every biomass based power generation units should have assured a reliable

supply of the biomass for their respective plants. Hence, MEDA was entrusted with the

responsibility of vetting the adequacy of the catchment area and fuel procurement plan

proposed by each project and also to ensure that there should be no overlap. Hence, the

intervener relied upon the Order passed by the Commission in Case No. 37 of 2003

dated 8 August, 2005.

10.4 Similarly, 8 MW biomass based co-generation unit established by M/s. Yash

Agro Energy Ltd, Nagpur is in operation from September 2008 and MEDA has

allotted the following Talukas for procurement of the biomass fuel for the said project;

a) Tal. Bhivapur Dist. Nagpur.

b) Tal. Pauni, Dist. Bhandara.

c) Tal. Chimur, Dist. Chandrapur.

d) Tal. Nagbhid, Dist. Chandrapur.

10.5 Already two units are designated for Tal. Bhivapur namely the unit of M/s.

Yash Agro Energy Ltd. and the unit of M/s. GMT Mining & Power Ltd. The biomass

required for the operation of the units is identical namely rice husk, soyabean stalks,

tur stems and wheat stalks. Therefore, granting the permission to another biomass

project in the same area would be directly in conflict with the directions issued by the

Commission.

10.6 The applicant requested the Commission to grant leave to the applicant to

intervene in the present case as intervener or being impleaded as Respondent No. 2 and

permit the applicant to participate in the present case for opposing the reliefs claimed

by the Petitioners in the view of the facts and circumstances in the interest of justice.

11. M/s. Yash Agro Energy Ltd. vide letter dated 2 July, 2011 submitted the

application for intervention in the present case and submitted its views as follows;


11.1 The applicant/intervener company has established 8 MW biomass based

Cogeneration power plant at Kolari, Tal. Chimur, Dist. Chandrapur. MEDA had

granted approval in the favor of Intervener Company and all other statutory

permissions were also obtained. The plant has been established on land admeasuring

10.5 acres at village Kolari, Tal. Chimur, Dist. Chandrapur. The intervener has till date

invested huge amount of Rs. 45 crore for the establishment of the plant.

11.2 MEDA has stipulated the catchment area for the procurement of biomass for

the intervener as under;

a) Taluka Bhivapur, Dist. Nagpur.

b) Taluka Pauni, Dist. Bhandara.

c) Taluka Chimur, Dist. Chandrapur.

d) Taluka Nagbhid, Dist. Chandrapur.

11.3 It is submitted that the Commission was pleased to take into account the fact

that the every biomass based power generation units should be assured a reliable

supply of the biomass for their respective plants. Hence, MEDA was entrusted with the

responsibility to vet the assessment of the adequacy of the catchment area and fuel

procurement plan proposed by each project and also to ensure that there should be no

overlap. Hence the intervener relied upon the Order passed by the Commission in Case

No. 37 of 2003 dated 8 August, 2005.

11.4 The Petitioner is praying that the Tariff of Rs. 6.50 /kWh be determined for its

power. This would have a serious adverse effect on the generation activities of the

applicant as well as other similar units. The applicant would be procuring biomass at

the prevailing market price, yet can afford to supply electricity at the Tariff fixed by

the Commission. The prayer for approval of the higher Tariff of the Petitioner is not

genuine but it is calculated mischief that will affect the viability of the unit of the

intervener as well as the other unit.

11.5 The intervener requested the Commission to grant leave and to intervene in the

present case as intervener or being impleaded as the Respondent No. 2 and permit the

applicant to participate in the present case for opposing the reliefs claimed by the

Petitioners in the view of the facts and circumstances in the interest of justice.


12. MEDA vide its letter dated 21 June 2011 sought the extension for the

submission of the field study report and said that the field study for assessing the

surplus biomass availability in Taluka. Bhivapur, Dist. Nagpur and Taluka. Kalamb,

Dist. Yavatmal has been outsourced and the same is likely to be completed by end of

the July 2011. In view of above, the Commission vide notice dated 12 July, 2011

scheduled the next date of hearing in this matter on 26 August, 2011 at 15.00 hrs. in

the Office of the Commission.

13. In line with the Commission’s directives, MEDA vide its letter dated 12

August, 2011 submitted the report on “Biomass Assessment Study” to the Commission

on 18 August, 2011. The following is the abstract of the study report prepared by the

MEDA on the availability of surplus biomass in Taluka. Bhivapur, Dist. Nagpur and

Taluka. Kalamb, Dist. Yavatmal.

BhivapurTaluka:

Particulars (MT/Year) Production Consumption Surplus

Agricultural Crop Residue 120953 75552 45401

Biomass from Forest & Other

lands

32021 7665 24356

Agro-industrial Residue 432 432 0

Grand Total 153406 83649 69757

M/s. GMT Mining and Power Pvt. Ltd. proposed consumption for 10 MW from Tal.

Bhivapur is 36417 MT/Year.

KalambTaluka:

Particulars (MT/Year) Production Consumption Surplus

Agricultural Crop Residue 54361 37136 17225

Biomass from Forest & Other

lands

27879 12638 15241

Agro-industrial Residue 54 54 0

Grand Total 82294 49828 32466


M/s. Maharashtra Vidyut Nigam Ltd.(MVNL) proposed consumption from Tal. Kalamb

is 14538 MT/Year.

13.1 After considering the proposed consumption of GMT & MVNL biomass power

plants, remaining available surplus biomass is very less and can be used for only

cushioning purpose as a buffer stock in case of droughts.

13.2 In accordance with the Commission’s Order dated 8 August, 2005 to prevent

unhealthy competition among the biomass power developers and to reduce the risk of

rise in prices of biomass and also to avoid overlapping in collection area, the Petitioner

should take consent from GMT & MVNL biomass power projects developers for their

proposed upcoming plants.

13.3 Also it is suggested that, the Petitioner can set up their power plants, after

obtaining permissions from the forest department for necessary required biomass

collection.

14. Second Hearing:

14.1 The second hearing in this matter was held on 26 August, 2011. Shri. Ashok

Chaudhuri, GM appeared on behalf of the Petitioner. Shri. P. V. Tayde, Manager

appeared on behalf of the Respondent (MEDA). Shri. Prashant Joshi, CEO appeared on

behalf of M/s. GMT Mining and Power Pvt. Ltd. As per the directives of the

Commission, MEDA handed over the biomass assessment report and list of 121 vacant

Talukas to the Petitioner, in the open court.

14.2 During the hearing, the Commission directed the Petitioner to study and submit its

say on biomass assessment report submitted by MEDA, on affidavit. After getting the

Petitioner’s views on report submitted by MEDA, the Commission will take a view in

this matter.

15. In line with the above directives of the Commission, the Petitioner vide its letter

dated 25 January 2012 submitted its views on the biomass assessment study report

which are as under;

a. Biomass consumption on account of the domestic fuel, fodder, thatching,

agro based industry etc. has shown at 83,649 MT/Year but source of this data


has not been mentioned. Some estimation has been made so such data of

consumption cannot be relied upon. Any minor assumption in the report can

make significant change in consumption number.

b. Report does not disclose anything about the collection efficiency. The data

regarding 24356 MT/year of surplus availability of biomass has been

indicated from forest and other land while the same figure available after

M/s. GMT’s requirement has been indicated as 16466 MT/Year. This shows

that, M/s. GMT has been allocated about 7890 MT/Year from forest land.

Have MEDA/forest department issued suitable sanction, as this could also

help us to initiate similar sanction procedure.

c. It has been indicated that the per capita consumption of wood and crop

residue per annum is estimated as 90 kg and 40 kg respectively in Tal.

Bhivapur, Dist. Nagpur. The domestic fuel consumption is 3327 MT crop

residue. In this area, the cattle is also sent for grazing and on average the

consumption of fodder is around 7 kg/day per cattle for 280 days, so the

consumption will be around 71848 MT for 36657 livestock. Crop residues

used for fodder are paddy straw, wheat straw, jowar stalks, pulse stalks etc. It

may please be noted that soyabean has not been mentioned. If it is

considered, the cropping area of soyabean as mentioned in the report for

Bhivapur alone is 34,137 hectres with an output of 91,043 MT/ annum. This

itself will be sufficient biomass requirement of the Petitioners project which

is less than 12000 MT/annum.

d. It is mentioned in the report that in Tal. Bhivapur approximately 50% of soya

husk is consumed and 50 % is surplus. Can there be clarification as to where

other 50% i.e. 45879 of soyabean residue is being consumed. It has already

mentioned that, largely paddy straw, wheat straw, jowar stalks, pulses stalks

etc. are being consumed as fodder and if largely consumed as thatching,

industries and miscellaneous purposes, how reliable and authentic is that

data.

e. As per the report, in Tal. Bhivapur, the crop residue generation and crop

residue ratio (CRR) has been mentioned on the basis of field survey, which


contradicts with the data as mentioned in the Biomass Atlas of India

submitted by Indian Institute of Science (IISC), Bangalore to Ministry of

New and Renewable Energy (MNRE). Further, the data is mentioned for

paddy straw and there is no data on paddy husk (rice husk). While the power

plants use rice husk and paddy straw is consumed as fodder of the livestock.

When this is applied for the four Talukas under reference, then there is a

huge variation on the biomass consumption.

16. On receipt of the Petitioner’s above comments on MEDA’s biomass assessment

study report, the Commission vide letter dated 13 February, 2012 directed MEDA to

submit its views / comments on the above issues raised by the Petitioner.

17. In response to above, MEDA vide its letter dated 23 April, 2012 submitted its views

/ comments on the issues raised by the Petitioner on the aforesaid report which are as

under;

a. The methodology for carrying out biomass generation, its consumption and

surplus availability given in the study report is based on the 100 %

collection efficiency, analysis of the secondary data and primary survey

carried in the sample households and other sectorial activities performed in

the Taluka. Therefore, source of data pertaining to biomass consumption is

based on the estimates drawn from the primary survey.

b. The surplus biomass availability figure in MT/year shown in the report

against forest and other land includes waste land other than forest.

Therefore, the surplus biomass of 7890 MT/ year available to M/s. GMT

from this source is not from forest. Hence, in case of procuring biomass

from forest land, it is suggested that permission from the forest department

should be sought.

c. It may be noted that, the crop residue like cottonstalks and soyabean are

used for domestic purposes. Further, soyabean is also consumed as a fodder

to larger extent. Soyabean husk and rice husk contribute to power

generation. With the given consumption, the net surplus of soya husk is

only 9104 MT. This surplus cannot be utilized on account of eventualities.


Hence, the possibility of getting the soyabean for a new biomass power

project in the Talukas is difficult.

d. Soya bean is consumed in domestic activities, thatching, brick kilns,

industrial purposes etc. Since the Taluka is assigned to M/s. Yash Agro

Energy Ltd. as biomass collection area, they consume soya husk as

secondary fuel. Therefore, from the total consumption of soya husk in the

Taluka, a major portion is consumed by the power plant already

commissioned.

e. It is submitted that, in case of present biomass assessment study the crop

residue ratio (CRR) is estimated on the basis of primary survey. The

biomass atlas prepared by IISC Bangalore is based on the survey carried out

in the year 2000. Therefore, the CRR figures considered by IISC Bangalore

likely to differ with present CRR.

f. Further, it is submitted that the paddy cultivated area in Bhivapur Taluka is

very small. Therefore, the crop residue generation for paddy husk (rice

husk) is not mentioned in the report. With the given data on paddy

cultivated area, rice husk generation and its consumption in allotted four

Talukas, the data on paddy to rice husk generation having not shown in the

report, bring no impact. Hence, the possibility of variation on biomass

consumption due to short of this data has no meaning.

g. Furthermore, MEDA clarified that there is no incomplete, inconsistent or

assumed data in the report. All the figures produced in the report are derived

after carrying out primary survey in the Talukas.

18. The Commission vide its notice dated 16 May 2012 scheduled the next date of

hearing on 22 June 2012 in the office of the Commission.

19. Third hearing:

19.1 The third hearing in this matter was held on 22 June 2012. Shri.S. A. Patil, GM

and Shri. Paresh Bodhe, Project Officer appeared on behalf of the Respondent (MEDA).

No one appeared on behalf of the Petitioner and intervener during the hearing. During


the hearing, the Commission read out a letter received from the Petitioner, wherein it is

mentioned that the Petitioner has already submitted all details and submissions to the

Commission for setting up of proposed 2 MW biomass based power plant using

gasification (Otto cycle) technology at two different sites in Maharashtra State.

However, due to a prescheduled meeting, the Petitioner is unable to attend the hearing

and requested for a suitable Order in the matter.

19.2 The Respondent submitted that, as far as the biomass collection from the two

proposed Talukas are concerned; the same collection area has been already allotted to

the other biomass developers. Therefore, it is not possible at this stage to give the

permission to the Petitioner for collecting the biomass within the same area for their two

proposed biomass plants.

19.3 Having heard the Respondent, the Commission directed the Respondent (MEDA)

to give its clear views/comments whether it is recommending or not recommending the

setting up of the Petitioner’s biomass based power plant using gasification (Otto cycle)

technology at their two proposed sites, with suitable reasons/justifications, on affidavit.

20. In line with the above directives, MEDA vide letter dated 18 July, 2012 submitted

its comments on the Petitioner’s biomass plant based on the gasification (Otto-cycle)

technology at their two proposed sites which are as under;

20.1 The methodology dated 14 July, 2010 declared by the Government of

Maharashtra (GoM) for extending benefits of Non-conventional Energy Generation

Policy dated 14 October, 2008 lays down allotment of four to five Talukas as biomass

collection area to the sanctioned independent biomass power projects for ensuring

sustained supply of raw material. This approach has been adopted by GoM in the wake

of Clause No. 2.21 of the Commission’s Tariff Order dated 8 August, 2005 in Case No.

37 of 2003. In view of this, new biomass power projects, irrespective of capacity,

cannot be permitted in the collection area already allotted to other biomass power

projects.

20.2 It would be appropriate not to remove this zoning policy for promotion of small

gasifier route biomass power projects (Otto-Cycle) and Boiler Turbine Generator

(BTG) route biomass power projects. It is likely to generate several such projects in


allotted collection areas creating unhealthy competition for procurement of raw material

and thus affecting the sustainability of the sanctioned/commissioned biomass power

projects. This would result in the rise of raw material prices which would raise undue

expectation amongst the developers regarding upward revision of Tariff.

20.3 M/s. GMT Mining and Power Ltd. and M/s. Yash Agro Energy Ltd. have raised

concerns over the allotment of area to the proposed biomass projects in Nagpur, which

is encroaching their collection area.

20.4 The biomass assessment study conducted in the given Talukas i.e. Tal. Bhivapur,

Dist. Nagpur and Tal. Kalamb, Dist. Yavatmal through an expert consultant, have

showed non availability of sufficient biomass for any additional power projects in these

areas.

20.5 In the light of the above, MEDA is of the opinion that, the 2 MW gasifier based

biomass power projects proposed by the Petitioner each in Tal. Kalamb, Dist. Yavatmal

and Tal. Bhivapur, Dist. Nagpur, cannot be sanctioned.

21. Fourth Hearing:

21.1 The fourth hearing in this matter was held on 8 August, 2012 in the office of the

Commission. Shri. Paresh Bodhe, Project Officer appeared on the behalf of the

Respondent (MEDA). No one appeared on the behalf of the Petitioner as well as

intervener. During the hearing the Commission considered the material placed on the

record by the Parties and posted the matter for further hearing on 4 October, 2012.

22. The Commission vide notice dated 25 September, 2012 rescheduled the hearing

in this matter on 2 November, 2012 in the office of the Commission.

23. Fifth hearing:

23.1 The fifth hearing in this matter was held on 2 November, 2012. Shri. Paresh

Bodhe, Project Officer appeared on behalf of the Respondent (MEDA). No one

appeared on behalf of the Petitioner and the intervener. During the hearing, the

Commission accepted the MEDA’s submission vide affidavit dated 18 July, 2012, for

not recommending the Petitioner’s proposed biomass power projects at Tal. Bhivapur,

Dist. Nagpur and Tal. Kalamb, Dist. Yavatmal.


24. DECISION WITH REASONS:

The Commission in its Order dated 8 August, 2005 in Case No. 37 of 2003, has inter

alia ruled as follows:-

“

2.21……..

………

While co-ordinating the development of Projects, MEDA as the State

Nodal Agency shall ensure that Project planning is done in a manner such

assured and reliable quantity of biomass fuel source of desired quality is

available for the Project on long term basis. For this purpose, MEDA

shall vet the assessment of the adequacy of the catchment area and fuel

procurement plan proposed by each Project, and also ensure that there is

no overlap……….”

In view of MEDA’s above recommendations based on the field study at the Petitioner’s

proposed sites, the Commission is of the view that while promoting the biomass based

power projects in the State, there is a necessity to give equal importance to the use of

biomass as fodder, as considerable agricultural biomass is also used for fodder purpose.

Furthermore, promoting biomass power project in the same collection areas which are

already allotted to other biomass power projects, would lead into unhealthy competition

amongst the biomass power project developers and result into the hike of biomass price in

the market. It is a fact that, increase in the price of biomass, would further result in

increase of Tariff for such biomass power projects for which end consumers of the

electricity would have to suffer. Since, it is observed that no surplus biomass is available

at the Petitioner’s proposed sites at Tal. Bhivapur, Dist. Nagpur and Tal. Kalamb, Dist.

Yavatmal for setting up of its 2 MWe biomass power projects based on gasification route

(Otto cycle), the Commission can understand MEDA’s above views for not

recommending the Petitioner’s proposed biomass power projects at above mentioned sites.

In view of above, the Commission is not inclined to determine the Tariff for the

Petitioner’s proposed biomass power projects based on gasification route (Otto cycle) at

the proposed sites.


Furthermore, the proviso to Section 64 (3) of the EA 2003, provides as follows:-

“(3) The Appropriate Commission shall, within one hundred and twenty

days from receipt of an application under sub-section (1) and after

considering all suggestions and objections received from the public,-

…

(b) reject the application for reasons to be recorded in writing if such

application is not in accordance with the provisions of this Act and the

rules and regulations made thereunder or the provisions of any other

law for the time being in force:

PROVIDED that an applicant shall be given a reasonable opportunity

of being heard before rejecting his application. ”

In the circumstances, in line with the proviso to Section 64 (3) (b) of EA 2003, the

Commission proposes to reject this Petition as not maintainable after giving a

reasonable opportunity to the Petitioner. The Petitioner shall file its say within a period

of thirty (30) days from the date of this Order failing which, it shall be presumed that

the Petitioner is no longer interested to be heard in the matter before the Commission

and accordingly, the Case No. 104 of 2010, will be liable to be stands dismissed.

Sd/- Sd/-

(Vijay L. Sonavane) (V. P. Raja)

Member Chairman

Documents

Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION … 58 42/Order_104_of_2010_27_Dec_20… · Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre