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PSERC Raises Tariff for DEE Group’s Biomass Plant, Boosting Revenue Outlook

The Punjab State Electricity Regulatory Commission (PSERC) has approved a revised tariff of Rs 5.224 per kWh for the 6 MW biomass power plant operated by Malwa Power Pvt. Ltd., a subsidiary of DEE Development Engineers. The new tariff will be applicable for a further 10-year period following the expiry of the plant’s original power purchase agreement in April 2025.

The biomass facility, located in Gulabewala, had been supplying electricity to Punjab State Power Corporation Ltd. under a 20-year agreement. During the interim period, the plant operated at a provisional tariff of Rs 3.50 per kWh. The newly approved rate represents a significant increase of about 49%, comprising a fixed cost of Rs 0.97 per kWh and a variable cost of Rs 4.254 per kWh, with the latter set to escalate annually by 5%.

The revised tariff enables the company to recover approximately Rs 5.8 crore for power supplied between May 2025 and February 2026. Looking ahead, the company expects improved financial performance, estimating power exports of around 4.53 crore units in FY2026-27 at an 85% plant load factor, translating into projected revenue of about Rs 24.3 crore.

In addition to the power plant, the company is developing a biomass pellet manufacturing facility at the same site, with a capacity of 72,000 tonnes per annum. The plant will convert agricultural residues such as rice straw into pellets for co-firing in thermal power plants. At 50% utilisation, the facility is expected to generate annual revenue of roughly Rs 23.4 crore, taking the combined revenue potential of both businesses to nearly Rs 48 crore in FY2026-27.

Despite the tariff increase, the company has indicated that the approved rate is lower than expected. It has raised concerns over the regulator’s reliance on older tariff norms instead of updated frameworks that better reflect current operating costs. As a result, the company is considering legal options, including an appeal, to seek a revision aligned with prevailing cost structures.

Overall, the tariff revision provides a financial boost to the project while highlighting ongoing regulatory challenges in ensuring viability for standalone biomass power producers.