Expedite tariff adoption, solar PPAs: Assocham to TN

Solar power generation is losing momentum, says the body

The Associated Chambers of Commerce and Industry of India (Assocham) has urged the Tamil Nadu government to expedite adoption of applicable tariff announced by the Tamil Nadu Generation and Distribution Corporation Limited (Tangedco) and the approval of power purchase agreements.

The industry chamber said it was of prime importance as there was a looming power crisis in the state coupled with delays in deployment of renewable energy projects.

“Delay in approval of the PPAs and unviable tariff suggested by the Tamil Nadu Electricity Regulatory Commission (TNERC) had severely affected investment proposals for solar power projects coupled with concerns on tariff and project viability,” said DS Rawat, national secretary general of Assocham.

Tamil Nadu’s pioneering role in solar power generation was losing momentum with these issues, he added.

“Developers are under stress as they had incurred considerable expenditure towards project development besides investments in land and other civil works,” he said.

Rawat also alleged there was uncertainty on the viability of solar power projects in the state as developers were foreseeing risks on account of a consultation paper on 'Comprehensive Tariff Order on Solar Power', issued by the TNERC in July 2013 proposing a tariff of Rs 5.78 per kWh, which was arrived on cost plus average basis, he added.

Tangedco had floated a tender under competitive bidding for procurement of solar power from developers, who were establishing solar power plants in the state based on the solar policy.

For the bidding process the applicable tariff announced was Rs 6.48 per kWh for first year, with five per cent escalation for first 10 years and a fixed rate for the remaining 10 years.

Besides, Tangedo had also issued a letter of intent (LoI) in April 2013 with a total capacity of 708-Mw to around 20 bidders.

According to the terms and conditions of the bid, developers are required to finalise and submit land documents within 30 days from the issue of LoI.

Assocham has proposed Tangedco to expedite the adoption of tariff at Rs 6.48/kWh for first year, with five per cent escalation for first 10 years and a fixed rate for remaining 10 years.

It urged the state to accelerate the approval of PPAs for the 708 Mw solar power capacity to boost investor confidence.