Rates for Peaking Run of River

Developers of peaking run of river hydropower project can enjoy better rates. Developer will be entitled to receive Rs. 8.50 to Rs. 10.55 per unit.

The new energy rate means, a peaking plant that can run for four to six hours in full capacity will fetch Rs 10.55 per unit. Rates for running the plant in full capacity for 3 hours to 3 hours and 59 minutes, and 2 hours to 2 hours and 59 minutes have been set at Rs 9.40 and Rs 8.80 per unit, respectively. Similarly, plant that runs in full capacity for one hour to 1 hours and 59 minutes get Rs 8.5 per unit. However, the power plants have to generate a minimum 30 percent of their annual energy during mid-November to mid-May. Previously, the minimum energy output to enjoy dry energy prices was 15 percent for a period of four months. 

The new rates is expected to encourage producers to build peaking power plants instead of run-of-river projects whose generation falls significantly during dry months when energy demand hits peak. Let’s see if there’s anything interesting in the proposed rates.

Parameters
Capacity	1 MW
Plant Load Factor	60%
Dry Energy	1,576,800 kWh	30%
Wet Energy	3,679,200 kWh	70%
Annual Energy Production	5,256,000 kWh	100%
Peaking hours	4 hours
Dry Months	6 months (180 days)
Peak Energy	720,000 kWh
Off-Peak	856,800 kWh
Dry Rate	NPR 4.80
Off-Peak	NPR 8.40
Peak	NPR 10.55
First year revenue	32,453,280

Certainly, I have made some rational assumptions besides mentioned above. (There is no clear guideline at present). They are

1) Peaking rates shall be applicable during dry months only.

2) Off-peak rate during dry season is assumed to be Rs. 8.40 per kWh.

Findings

The first year income of 1 MW plant is NPR. 32.453 million against NPR 30.905 (if the project is just a simple RoR project). By the way, GoN is considering six months as dry season. NPR 30.905 million is calculated by considering it.

This means, Pror with 4 hours peaking facility will receive NPR 1.548 million (approx.) more per MW than RoR counterpart. This will translate to 5 percent increment.

THE MILLION DOLLAR QUESTION. WILL 5 PERCENT ENOUGH TO LURE DEVELOPERS?

The cost of constructing peaking run of river will definitely be costly compared to RoR project. Only time will tell whether the proposed peaking rates will be sufficient enough or not?