Tamil Nadu sets new tariff to rejuvenate solar policy

The Tamil Nadu Electricity Regulatory Commission (TNERC) has introduced a price for solar-power producers as it was unsuccessful to bring in investments for last two years in India.

The state-run electricity distribution utility has decided to pay 7.01 rupees (11 cents) for a KWh for power from solar PV plants and 11.03 rupees per KWh for plants that use solar-thermal technology.

Tamil Nadu, a state with 300 sunny days has failed to make significant progress towards the solar target announced two years ago of installing 3,000 megawatts by 2015.

Moreover, the investments got delayed as the utility and regulator tried to lower tariffs separately, avoiding the conditions on rates reached during auction of projects.

The tariff isn’t great, but producers will go ahead with the project since the availability of land and funding, said, M Umapathi, chairman, managing director, Voltech, which is planning a 10MW plant near Tuticorin.

TNERC will also increase solar component of the Renewable Power Obligation (RPO) from 0.25% to 2% since the utility would need to create demand to sell the solar power that is generated. The RPO mandates all companies to procure a certain portion of their power needs from renewable sources.

The solar policy of Tamil Nadu, launched in October 2012, demanded consumers to source minimum 6 percent of their electricity from solar. However, the state has so far built only 109 MW of solar plants to date.

The plants can earn the latest tariff for 25 years supposing that investors will not claim accelerated depreciation tax benefits.

In case, the investors demand the benefits, tariff will drop to 6.28 rupees a kilowatt-hour for photovoltaic plants and 9.88 rupees for solar-thermal plants.

Using Solar-thermal technology, sunlight is concentrated on liquids to produce steam to run turbines and PV panels convert rays directly to electricity.

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