The Hindu Business Line : TN should allow 3rd party sale in wind power: CII

TAMIL NADU, which leads the country in installed wind power capacity, should allow third party sale of wind power and also make the tariff more attractive to get more investments in the sector.

A study on `Showcasing the success of wind energy in Tamil Nadu,' prepared by the Confederation of Indian Industry - Tamil Nadu, which has made these recommendations, also suggested that wheeling of power be permitted in all categories of high-tension consumers.

The report, prepared by Feedback Business Consulting Services Pvt Ltd, points out that allowing third party sale will prevent diversion of investments to other States such as Maharashtra where third party sale is allowed.

At present, those who have put up windmills either sell the power to the Tamil Nadu Electricity Board or use it for captive consumption on paying 5 per cent wheeling charges to the electricity board.

The board pays Rs 2.70 for a unit of wind power.

The study recommends that it pay a price of Rs 3.12 a unit with 2 per cent annual escalation in price.

The study notes that it was a combination of factors - consistency in policy, coordinated steps by all government agencies concerned to promote wind power and a good grid infrastructure to evacuate the power - helped growth of the sector in the State.

Against a wind potential of 3050 MW, Tamil Nadu has an installed capacity of 1664 MW, accounting for as much as 57 per cent of the country's installed wind power capacity of 2909 MW. "Tamil Nadu has been able to attract and retain the private sector investments and the credit goes to the practice of consistent and transparent wind power policy," the report says.

The report recommends that Tamil Nadu should focus on grid reinforcement on a regular basis to facilitate more and more penetration of wind projects and retain consistency in policy, as this is one area, which almost everyone in the industry is concerned about.

It also wants the State to ensure availability of easy funding from various State-and national-level financial institutions.

There should also be transparency in power purchase pricing.

The non-compatibility of wind project investment under the Technology Upgradation Fund for textiles should be reviewed, the report says.

Citing examples of companies that have invested in wind power, the study says these companies reported substantial saving in power cost - Rs 10 crore power cost saved through self wheeling in the case of Madras Cements Ltd and 30 million units a year used for captive consumption and 50 per cent saving in power cost by wheeling wind power in the case of Dalmia Cements.

It also refers to the socio-economic benefits in terms of jobs generated for a MW of wind power - direct employment to five persons, indirect employment to 20 persons and short term employment to 50 persons during the construction phase.

The report points out that other States such as Madhya Pradesh (5500 MW wind power potential), Andhra Pradesh (8275 MW), Gujarat (9675 MW), Karnataka (6620 MW), Rajasthan (5400 MW) and Maharashtra (3650 MW) have estimated potential much higher than Tamil Nadu.

On what these States can learn from the Tamil Nadu experience, the report says there is a need to create a climate to attract private sector participation, thrust on sound and consistent power policy, need to create a sense of security in the business, encourage third party sale and levy reasonable wheeling and banking charges for captive consumption.

`There's more to it'

Mr K. Skandan, Chairman, Tamil Nadu Electricity Board, said that it was wrong to infer that financial support such as the Technology Upgradation Fund alone was needed to generate wind power.

Instead, it was important to look at the economics of the industry itself. Wind turbine components must be made cheaper, as financial support would not prop up the industry in the long run. The TUF assistance was only one avenue for financial assistance, he said and wanted the impact of incentives on price to be studied.

He referred to efforts being made in the UK to use wind energy to produce hydrogen by electrolysis of water to be used in fuel cells and suggested that the technical feasibility of this could be studied here.

Electrolysis is the process of passing an electric current through a substance in order to produce chemical changes in the substance.

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