You are here: Home » Economy & Policy » News
Business Standard

Tamil Nadu hikes tariff for wind power, slashes it for solar power

Peak power requirement is increasing at around 8 % annually

T E Narasimhan & Gireesh Babu  |  Chennai 

Solar power's moment of reckoning arrives

The Tamil Nadu Electricity Regulatory Commission (TNERC) has fixed the tariff for While the tariff for Solar PV projects has been dropped by 27% compared to the previous tariff order, the levelised tariff of wind power has seen an increased.

Solar PV projects at Rs 5.10 per unit and Rs 11.12 per unit for Solar Thermal projects without Accelerated Depreciation (AD). It may be noted, the average tariff for solar in other states are also in the range of Rs 5.5-5.7 per unit.

In another order, the Commission has fixed the levelised tariff for wind power at Rs 4.16 per unit without Accelerated Depreciation (AD) benefit. The orders are issued for the next one year.

Read more from our special coverage on "RENEWABLE ENERGY"

TNERC said that the AD benefit component of the tariff is Rs.0.54 per unit for solar PV and Rs 1.17 per unit for Solar Thermal. The previous tariff for solar, issued in September, 2014, which was later extended in 2015, was Rs 7.01 per unit for Solar PV projects and Rs. 11.03 per unit for Solar Thermal projects without AD benefit. The AD benefit component of the tariff is Rs.0.73 per unit for solar PV and Rs 1.15 per unit for Solar Thermal.

The levelised tariff for wind power for the year was determined as Rs 4.16 per unit without AD benefit. The accelerated depreciation component of the tariff is Rs 0.46 per unit. The tariff, issued on July, 2012 and later extended, was Rs 3.51 per unit, making the wind mills commissioned on or after the date of issue of order eligible for this tariff.

K V Sajay, executive, Vice president - Solar Business Unit, Gamesa India said that to set up a MW of solar unit has been evolving every quarter and the costs has come down due to the increase in volume. There is incremental change in terms of mounting structure. The power plants, which has been developed so far in 1,000 Volts is now shifting to 1,500 volts, which helps to generate more power.

"Solar power for individual consumers is much cheaper than grid tariff, creating an explosion in demand for rooftop solar. We are able to sell solar power to individual consumers at a price point of around Rs 5.3 per unit of power, against a grid industrial power variable cost of around Rs 6.7, leading to a 20 per cent saving in customers' energy costs. In fact, we are commissioning a solar project soon in TN for 30 MWP, which will be Asia's largest private sector solar PPA project," said Kuldeep Jain, Managing Director, CleanMax Solar.

While the previous tariff of Rs 7.01 was comfortable, the tenure was just one year, which was very little for the industry and if there is no window period of closure, the industry can even adjust with Rs 5.10 tariff. The average tariff for solar in other states are also in the range of Rs 5.5-5.7, while the NTPC rates are Rs 4.65, so this is in line with those tariff rates.

This will result in the size of the projects getting larger. While currently the projects in the range of 5-10 MW, could be scaled up to 100-150 MW and this would give economies of scale for the companies.

However, the companies would also consider the issues like the strength of the off-takers and one would require larger lead time to see the same IRR, considering the tariff is lower.

The payment from the offtaker is in line with the payment to the wind energy, which is around 10-12 months. Earlier, the higher tariff for solar was attractive for the investors, though there were issues with the offtakers, he said.

The 2012 order also said that the wind mills commissioned prior to May 15, 2006 shall be eligible for a tariff of Rs 2.75 per unit and the wind mills commissioned between May 15, 2006 and September 18, 2008 shall be eligible for a tariff of Rs 2.90 per unit. The wind mills commissioned between September 19, 2008 to the date of this order shall be eligible for a tariff of Rs 3.39 per unit, TNERC Order said.

Total installed capacity of solar power projects in Tamil Nadu as on February was 581.26 MW, while installed capacity of wind power was 7,512 MW which is more than 50% of the power from other sources in Tamil Nadu.

For Biomass, the fixed cost for the new plants has been fixed as Rs 2.22 per unit on the first year, gradually decreasing to Rs 1.90 per unit in the 10th year.

Power situation

Current generating capacity connected, including Centre and State units, to the Tamil Nadu's grid is 13,883.5 MW as on February 29, 2016. This includes 4,660 MW from four thermal stations of the Tamil Nadu Generation and Distribution Corporation Ltd's, 516 MW from four gas turbine stations, 2,288 MW from hydro stations, 852.5 MW from private generating stations, 68 MW as contribution to Tamil Nadu grid by sale of electricity from captive generating and biomass plants, 5,464 MW as Tamil Nadu's share from central generating stations.

Generating capacity from privately owned wind farms is 7,512 MW as on February 29, 2016. The installed capacity of cogeneration plants is 659.4 MW and biomass power projects is 230 MW. The solar generation capacity is 581.26 MW.

The present demand in the State is around 13,700 MW. The expected peak may vary from 14,200 MW to 14,800 MW. The peak power requirement is increasing at the rate of around 8% annually in the State. Therefore any capacity addition will help the State to a great extent.

First Published: Mon, April 04 2016. 11:26 IST