The first category is projects commissioned before December 27, 1999. These will continue to be governed by the policies declared by the state government at that time, with a purchase price of INR 2.25 ($0.05/kWh) set in 1994-95 with annual increases of 5% for the first ten years after commissioning. The rate then stabilises for the following three years, before decreasing by 5% annually for the next seven years, covering am estimated 20 year working life.
Projects commissioned after that date but before April 1, 2003 (when sales tax and other benefits from the state government were abolished) are only eligible for the fixed tariff for eight years. The sales tax relief and other incentives available to these projects allows developers to pay off loans over a shorter period, while still leaving them with adequate returns, says MERC. After eight years, they can sell power on the open market.
Projects commissioned after that date but before March 31, 2007 (the end of India's Tenth Five Year Plan period) fall into a third category. Tariffs have been set at INR 3.50/kWh ($0.077/kWh) for the first year from the date of project commissioning, increasing by INR 0.15/kWh annually for a period of 13 years. The net energy delivered to the grid for use by the wind plant owner, or for sale to third parties, would be adjusted against the time-of-day tariff time slots.
Significantly, while other states have set high charges to wheel wind power across their wires, MERC has set the rate at just 2% of power sales, while the transmission loss charge has been fixed at 5% of electricity transmitted. The commission has put a ceiling of 750 MW on capacity addition for sale of power to the state electricity board and other utilities from April 1, 2004 to March 31, 2007, but no such limit has been specified for power for own-use or third-party sales. MERC will review this policy once the ceiling is reached, or after 2007, whichever is earlier, it adds.