TN well placed for clean energy transition

Deepak Krishnan/Bharath Jairaj | Updated on June 10, 2021

The state’s solar, industrial and EV policies have created an enabling environment, which needs to be strengthened

Inter-linkages between different sectors of an economy are axiomatic. Despite this, siloed thinking has led to suboptimal outcomes in India and States’ development.

Recent times, however, have seen attempts at moving towards more integrated thinking. Much of this has been due to technological and economic developments.

On the technology side, electric vehicles require the holistic consideration of electrical grid, urban, and transport planning. On the economics side, energy-efficient buildings with solar power can reduce costs for building owners.

Let’s look at three policies issued in Tamil Nadu since 2019: (i) Tamil Nadu Solar Policy, 2019; (ii) Tamil Nadu Electric Vehicle Policy, 2019; and (iii) Tamil Nadu Industrial Policy, 2021. There are opportunities that arise based on the inter-linkages between these three policies in Tamil Nadu.

Overview of policies

The Solar Policy’s vision is to embed solar energy development as part of a larger state strategy involving DSM (demand side management), energy conservation, energy efficiency (EE), electric mobility, smart grids, and DRE (distributed renewable energy).

It also seeks to generate green jobs and make solar power available, accessible, and affordable to all citizens.

Based on an order by the Tamil Nadu Electricity Regulatory Commission (TNERC) in March 2019, the Solar Policy was made applicable to low tension (LT) consumers except for agricultural and hut category consumers.

The Industrial Policy lists the following goals: 15 per cent growth rate in manufacturing during the term of the policy; attract ₹10 lakh crore between 2020 and 2025; create employment opportunities for 20 lakh people; and increase the contribution of the manufacturing sector to 30 per cent of gross state value added (GSVA) by 2030.

Significantly, the Industrial Policy seeks to promote resilient industrial development that aligns with environmental sustainability.

The EV Policy aims to “attract ₹50,000 crore of investment in EV manufacturing and to create a comprehensive EV ecosystem in the state. This investment is expected to create 1.5 lakh jobs.”

Though Tamil Nadu has since elected a new government, these policies could continue to guide state actions. The three policies have areas of convergence — for example, both the Industrial and Solar policies identify solar and RE component manufacturing as a priority sector for incentives.

A similar convergence exists between the Solar and EV policies on the promotion of solar-powered charging stations. The Industrial Policy also recognises EVs as a sunrise sector that is entitled to state support.


Priority areas

Four critical priorities emerge from these synergies that the new government should consider.

First, the Solar Policy excludes high tension (HT) consumers from the ambit of the net feed-in mechanism. These consumers are primarily industries, many of which the Industrial Policy seeks to attract.

With corporates adopting increasing RE shares in their energy mix, Tamil Nadu can incentivise RE-seeking companies to set up operations in the state by providing favourable RE tariffs and policies.

Giving the companies a chance to benefit from the Solar Policy will be an excellent step for both the industries and the state to achieve their targets.

Two, the state government and the utility TANGEDCO need to look at strategies for working with commercial and industrial (C&I) consumers to increase RE in the energy mix.

There are no silver bullet solutions; it involves a deliberative process with industry and regulators. By offering C&I consumers special RE tariffs, TANGEDCO could reduce the sales migration that the state has seen and increase much needed revenues for the utility.

Three, investment in battery manufacturing can benefit Tamil Nadu immensely.

With its automobile cluster located in Sriperumbudur and with new clusters for battery-operated two-wheelers in Hosur-Krishnagiri, increasing investment in batteries will accelerate Tamil Nadu’s ambition of becoming an EV manufacturing hub.

The battery manufacturing plants and enhanced supply chain provisions will also be vital in ensuring seamless integration of higher shares of RE into Tamil Nadu’s electric grid.

And fourth, two critical sectors must be explored to help generate new renewable power. First, green hydrogen is a crucial enabler for cleaner power, transport, and industry sector, as acknowledged by the National Hydrogen Mission. The second is the offshore wind sector, where Tamil Nadu can contribute 35 GW of clean power.

There is merit in understanding how existing manufacturing capabilities can be leveraged for offshore wind plants without impacting coastal or marine life.

In addition to meeting domestic needs, there is also an export market where the state can gain.

Thus, the three policies create an enabling environment that can help achieve multiple environmental and economic outcomes.

The newly elected government must build on these recommendations and help accelerate Tamil Nadu’s transition to a clean energy future.

The writers are with Energy Program, WRI India

Published on June 10, 2021

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