Brakes India Ltd, part of the TVS group, has formed a joint venture with US-based SunEdison for solar power.

The venture’s 7.72-MW Tamil Nadu solar plant, commissioned Wednesday, will supply power to Brakes India.

Such a structure, better known as ‘group captive model’, is common in the wind industry, but new in solar.

Captive model SunEdison officials said the plant “happens to be the largest solar power plant under the group captive scheme in India”.

The ‘group captive model’, where private power companies and power purchasers set up joint ventures that will own the power plant is common in Tamil Nadu.

This is because such alliances have one major advantage: the State does not levy the ‘cross subsidy surcharge’ on the power sold.

‘Cross subsidy surcharges’ are levied on third party sales of power so as to make the buyers to defray for the subsidised power that Governments give to the poor and the underprivileged.

While many States have waived the cross subsidy surcharge on wind and solar in order to encourage renewable energy installations, Tamil Nadu charges ₹3.46 per kWhr.

The companies haven’t disclosed the tariff Brakes India will be paying.

But S Kesavan, Executive Director, Brakes India, says while the rate is higher than the price the State-owned electricity utility charges, the big advantage is that it remains the same for a long period.

If SunEdison had set up a solar plant on its own and sold power to Brakes India directly, the tariff would have been higher by ₹3.46.

Tax-saving sop On the other hand, if Brakes India had owned the solar plant, it could have got ‘accelerated depreciation’, a tax-saving sop that allows a renewable energy company to write off 80 per cent of the plant cost in the first year as ‘depreciation’, which would result in lower taxable profits.

This project marked “the launch of a new business for us”, said SunEdison’s Asia-Pacific Head, Pashupathy Gopalan.

A unique feature of the plant is that it is fitted with trackers, so that the panels always face the sun.

Trackers typically raise the cost of a plant by 12 per cent, but result in 15-18 per cent more generation.

SunEdison has assured Brakes India 1.81 million units per MW of generation.

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