Basics of Tariff

Calculation
Thermal Power Plant
 Conversion of MW to MU

Kwh (Unit) generated by a plant =

MW * 1000 * Days of operation * Hrs. of Operation * PLF *
Availability Factor

MU (Million Units Generated) =

MW * 1000 * Days of operation * Hrs. of Operation * PLF *
Availability Factor/1000000
 TO START WITH

How much generation is required to

generate 1MU of electricity.
(In terms of
Plant capacity and Time)
 TYPES OF TARIFF
⦿ Nominal Tariff – Tariff calculated for each year. NT = FC+VC
(The exercise done every as the variable cost keeps on changing
or tariff may be increased using escalation factor )

⦿ Discounted Tariff – Present value of future Tariffs. Discount rates

are notified by CERC.

⦿ Levelised Tariff – Tariff for entire life of the plant and in a single
part tariff with no components. It is weighted mean which
weighted w. r. to Discounting Factor ( Based on Discounting
Rate).
PRINCIPLE & COMPONENTS
Capital Cost
Debt Equity Ratio
PRINCIPLE & COMPONENTS
(Fixed Cost Components)
⦿ ROE

⦿ Interest on Loan

⦿ Working Capital

2 months of fuel cost

Maintenance spares
Receivable equivalent to two months
O & M Expenses for one month
Continue…
PRINCIPLE & COMPONENTS
(Fixed Cost Components)

Interest on Working Capital

Depreciation Rate

O & M Expenses(operation and maintenance expense)

PRINCIPLE & COMPONENTS
(Variable Cost Components)

Primary fuel

Secondary Fuel
OTHER TERMS

PLF(plant load factor)

PAF(Plant Availability Factor)

Specific Oil Consumption

Station Heat Rate

Auxiliary Power Consumption

CALCULATIONS
GENERAL CALCULATIONS

Capacity of Plant = 1000 MW

Capital Cost/MW = 4 Crores/MW

Total Project Cost = 1000 * 4 = 4000 Crores

Debt = 70% of 4000 Cr = 2800 Cr 70% debt(loan)

30% equity(equal
share holders) is the
norm for any Indian
Equity = 30% of 4000 Cr = 1200 Cr power project
 Energy Generation Calculations

Energy Generated in MU with given data =

1000 * 1000 * 365 * 24 * 85%(PLF which is fixed for thermal Power

plant) * 100 %(PAF)

1000000

= 7446 MU ----------------------------------A
Fixed Cost Calculation

ROE
15.5% of Equity Component
15.5% of 1200 Crore= 186 Cr. ----------------------1.

Interest on Loan
10% of Loan Component
10% of 2800 Crore= 280 Cr. ------------------------2.
Continue…

Working Capital = 10% of total project cost

Working Capital = 10% of 4000 Cr = 400 Cr.

Interest on Working Capital = 10%

Interest component on W.C. = 10% of W.C.

= 40 Cr. -------------------3.
Continue…

Depreciation = 5.28% per yr. of project cost

Depreciation = 5.28% of 4000 Cr = 211.2 Cr. ------------4

O & M Expenses = 10 Lakhs/MW

Total O&M Expenses = 10 * Plant Capacity
= 10 * 1000 =10000 Lakhs
= 100 Crores -----------------------5.
Continue…

Total Fixed Cost = 1+2+3+4+5

= ROE + Interest on Loan + Interest on W.C. + O&M Expenses +

Depreciation

= 186 + 280 + 40 + 211.2 + 100

= 817.2 Crores -------------------------------------6.

Fixed Cost Per Unit

Total Fixed Cost / Total Units generated

i.e. equation 6 /equation A

= 817.2 * 108 / 7446 * 107 Rs/Kwh

= 1.0975 Rs/Kwh --------------------------- 7.

VARIABLE COST CALCULATION

Specific Oil Consumption = 2ml/Kwh

= 2 * 10-3 L/Kwh

Cost of Oil (Secondary Fuel) =

Oil Consumption (ltr/ kwh) * Cost of oil/ Kiloltr * 10-3

= 2 * 10-3 * 10000 * 10-3 = 0.02 Rs/ Kwh ------8.

Heat Contribution of Oil

⦿ Calorific Value of Oil = 10000 Kcal/Ltr

⦿ Total oil consumption = 2 * 10-3 L/Kwh

⦿ Heat Contribution of oil

= Calorific Value of oil * Total oil consumption (Kcal/Kwh)
= 10000 Kcal/Kwh* 2 * 10-3 L/Kwh =20 Kcal/Kwh
------------------------
-9
Heat Requirement from Coal

Station Heat Rate =

Heat Contribution from Oil + Heat Contribution from Coal

2425 = x + 20
X = 2405 Kcal/Kwh (Heat Contribution Required from Coal)
 Calorific Value of Coal = 4000 Kcal/Kg

Total Coal Requirement for 1 Kwh of electricity generation =

Total heat required by coal for 1 Kwh generation (Kcal/Kwh) (Eqn. 9)
Calorific Value of Coal (Kcal/ Kg)

= 2405/4000 Kg/Kwh= 0.60125 Kg/Kwh

Continue…

⦿ So
Coal Required for 1 Kwh Generation = 0.60125 Kg

⦿ Unit price of Coal = Rs 1000/ Tonne

⦿ Cost of Coal Required for Generating 1 Kwh of Electricity =

(0.60125 /1000) Tonne/ Kwh * 1000 Rs/Tonne =

0.60125 Rs/ kwh --------------------------------10.

VARIABLE COST

V.C. = Cost of Oil + Cost of Coal

V.C = Equation 8 + Equation 10

V.C. = 0.02 +0.60125 = 0.62125 Rs/ Kwh

-------11.
 Please Note
Auxiliary Consumption = 7.5%

This power is not available for sale and the cost of the generation of this
power has to be loaded on the power which is sold in market so…….

Variable Cost = Equation 11/ (1-7.5%)

= 0.62125/(1-7.5%) = 0.67162 Rs/ Kwh---12.
TOTAL COST OF GENERATION

= Total F.C/ Unit + Total V.C./Unit

= Equation 7 + Equation 12

= 1.186+ 0.67125

= 1.857 Rs/KWh =Rs. 1.86/KWh

Thank You

Queries Are Welcomed!!!!!!