part 1: overview of cogeneration and its status in asia - Fire

Cogeneration in Asia today 57
1.4.3 Government initiatives to promote cogeneration
Acknowledging the fact that cogeneration plants are more efficient, have low gestation period,
and can effectively create additional power generating capacity, government has issued
guidelines related to clearance of projects and fixing of tariff for export of electricity by
cogenerators.
Industries will be allowed to develop cogeneration facilities without necessarily going through
competitive bidding process. If the cogeneration plant is a topping-cycle, it must supply at
least 5 MW to the grid for not less than 250 days in a year in order to assure grid stability and
adequate planning of the power system. Depending on the type of fuel used, the plant should
meet certain efficiency criteria to be eligible as a cogeneration facility. If the cogeneration
facility is a bottoming cycle, the total useful power output should not be less than 50 per cent
of the total heat input through supplementary firing.
The schedule for power supply to the grid should be mutually worked out between the SEB
and the cogenerator, keeping in mind that the surplus power may vary during the day and with
season. While negotiating tariff, the basic consideration should be to share the benefits of
higher efficiency. Industry will be assured of power supply, possibly at a lower tariff than that
charged by the utility due to cross subsidization.
Some progresses in cogeneration have been made thanks to the initiatives and proactive role
of the Ministry of Non-conventional Energy Sources (MNES) and the Indian Renewable Energy
Development Agency (IREDA). They have extended financial assistance such as subsidies,
low-cost loans and technical assistance. In order to launch demonstration projects, MNES
provides capital subsidy of Rs 20 million/MW of surplus power (comprising Rs 7 million/MW
as subsidy and balance as soft loan) to cooperatives and public sector sugar mills, and Rs 7
million/MW of subsidy (maximum of Rs 60 million per project) to other sugar mills. 5 In
addition, there is an interest subsidy of Rs 1.5 million/MW for projects with 1-4 MW of surplus
power generating capacity, and Rs 3.5 million/MW for those with more than 4 MW surplus
capacity. IREDA provides up to 75 per cent of the financing of the project at lower than market
interest rates, and allows for a repayment period of 10 years, allowing for a moratorium period
before the cogenerator is actually required to start repaying the loan.
5
Table 1.5 Incentives offered by state governments for cogeneration projects
States Maharashtra Tamil Nadu Karnataka Uttar Pradesh
Participation Government &
cooperative
Power wheeling
rates
SEB buy-back
rate
20 per cent of energy
generated
>4 MW: Rs2.25/kWh;