Comments
In a much-awaited decision, the Tamil Nadu Electricity Regulatory Commission, has granted time till April 1, 2016 for solar developers to put up projects in the State and avail themselves of the tariff of Rs 7.01 a kWhr. The earlier ‘control period’ was up to September 12, 2015.
This comes as a big relief for the solar industry, which has expressed a lot of interest in putting up projects in the State. “We will be moving in high-gear,” said Pashupathy Gopalan, the Asia-Pacific head of the US-based renewable energy major, SunEdison, who hailed the decision as “progressive”. SunEdision’s immediate interest is for about 150 MW.
Viswanathan Iyer, General Manager-Business Development, Sterling & Wilson, part of the Shapoorji Pollonji group said that the company “can now comfortably target 100 MW.”
However, one of the three members of the Commission, Mr S Nagalsamy, has given a dissent note, arguing that the tariff need not anymore be as high as Rs 7.01 as projects costs are falling, and extending the applicability of the tariff till April 1, 2016 would result in a notional loss of Rs 23,000 crore to the state electricity utility, TANGEDCO.
Mr Nagalsamy has also cautioned that the move could be legally challenged.
Background
On September 12, 2014, the TNERC had come out with its ‘tariff order’ which said that those solar power project developers who could put up their projects and also sign a power purchase agreement with TANGEDCO by September 12, 2015, may sell their power to TANGEDCO for Rs 7.01 a kWhr.
The order elicited good response from the industry and many companies sent in their letters along with the prescribed commitment fee, for capacities totalling over 1,500 MW.
However, the draft power purchase agreement (PPA) had to be approved by TNERC, which did it only on January 27, 2015. As such, developers had much less time to complete the whole process, which involves tying up finances, buying land and signing the PPA with TANGEDCO.
Up to now, PPAs have been signed for projects totalling only about 220 MW.
There was therefore a clamour for extension of the time for the applicability of the tariff. That has been granted now.
Dissent
Two of the three-member TNERC have been in favour of the order—Mr Akshay Kumar, the Chairman and Mr S Rajagopal, Member. However, the third member, Mr Nagalsamy, has given a sharply-worded dissent order, noting that neither TANGEDCO nor the consumers are beneficiaries of the order.
“It is a mystery (as to) who is instrumental in prompting my colleagues to undertake this exercise which is not legally correct,” he says, pointing out that “nobody asked for an extension” and “the commission never met during these months to discuss the issue.”
Mr Nagalsamy’s point is basically that the tariff of Rs 7.01 per kWhr was fixed when the cost of putting up a solar power project was Rs 7 crore a MW. The costs have since come down to Rs 5.86 crore a MW, “which translates to approximately Rs 5.87 a kWhr. He quotes the Government of Tamil Nadu as saying that applications have been received for 5,366 MW of solar and calculates the notional loss to the buyer of the power, TANGEDCO, to be Rs 23,000 crore.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.