“Capacity utilisation of biomass based power plants has declined sharply during the last two years on account of steep increase in the cost of biomass fuels,” a communiqué from TNERC said. “The capacity utilization, which ranged from 5% to 70% during 2007-08, declined to 3% to 48% during 2008-09.”
This was said to have been due to a hike in the price of the raw material, Juliflora, due to demand from textile and paper sectors. However, there are companies that majorly use a mix of coconut husks, groundnut shells, plywood waste etc as biomass; but they have a lower calorific value thus generating lesser power. Hence, the biomass power plants contributed only 40-50 MW to the grid despite having an installed capacity of 147 MW.
These power plants agreed to the government’s insistence of operating their plants on the condition that the TNEB procures their power at INR6.80 per unit. The mutual twenty year power purchase agreement stopped either party from seeking alternate buyers or sellers.
To address these concerns the TNERC has also introduced a two part tariff – the first part a fixed one and the second part a variable one depending on fuel cost.
