State’s story of solar energy looked very good till March 2017; authorities hopeful
The last five years marked an extremely lean phase in wind power capacity addition – a little over 1,000 megawatt (MW) – for Tamil Nadu. Not long ago, between April 2010 and March 2012, the State saw a whopping addition of over 2,000 MW. The State’s story of solar power looked very good till March 2017 as more than 1,500 MW was added through solar power in the two years ending then. The last one year witnessed a modest increase of 353 MW. At the beginning of the current financial year (2018-19), the figures of installed capacity for wind and solar power were 8,152 MW and 2,046 MW respectively.
In the case of wind energy, for most of the last five years, factors such as shrinking size of land, prolonged delay in settlement of bills by the Tamil Nadu Generation and Distribution Corporation (Tangedco) to suppliers of wind power and inadequate capacity for power transmission came in the way of capacity addition. The migration from the preferential tariff regime to tariff determination through competitive auctions in early 2017 was a significant development for the wind power sector at the national level. Since then, there has been a “steep fall” in the procurement prices.
In February last year, when the Solar Energy Corporation of India (SECI) conducted the auction, the price quoted was Rs. 3.46 per unit. Later in the year, when the Tangedco floated reverse bids, the rate came down by four paise. A week ago, the Tamil Nadu Electricity Regulatory Commission (TNERC), in its generic tariff order, fixed the rate at Rs. 2.86/unit without accelerated depreciation. If the depreciation had to be considered, the rate will be Rs. 2.80/unit.
K. Kasthurirangaiyan, a veteran wind power developer, is quite bitter about the order.
“I do not foresee even incremental addition hereafter. The order’s terms as well as tariff rate are “unreasonable.” However, whatever wind power developers have committed to will materialise, he says, referring to wind power projects of 450 MW, which are being implemented in response to the reverse bidding process of the Tangedco. He is also unhappy about the Commission reducing the period of energy banking to one month [for all new projects] from the earlier practice of allowing the facility up to the end of the financial year concerned. Even though Ramesh Kymal, a leading wind turbine manufacturer, feels that the State has the country’s best wind potential and good infrastructure to support capacity addition, he is also of the view that the reduction of the banking period “has come as a huge setback and will be a deterrent to attract wind installations in the state from captive users.”
K. E. Raghunathan, a long-standing player in solar energy, refers to a number of factors that have come in the way of capacity addition, many of which are relevant for the rest of the country too. The “confusion” following the introduction of Goods and Services Tax for solar modules and “undue crash” in the price of solar power are among the factors.
In Tamil Nadu, the rate fixed was Rs. 3.47 per unit through auctions last year. In its March 2018 tariff order, the TNERC brought the price further down to Rs. 3.11 per unit for solar power without accelerated benefit. Also, litigation in respect of MW-scale projects and the virtual suspension of distribution by the Tangedco of net meters, required for those who put up roof top solar power units, have contributed to the sluggish growth, Mr Raghunathan says. Notwithstanding the industry’s not so favourable perspective, the authorities seem to be confident of overcoming the present problem. Pointing out that the Central government has fixed a target of 175,000 MW of renewable capacity by 2022, a senior government official says the target accomplishment will have to be met through “enormous contribution” from Tamil Nadu which, the authorities hope, will certainly take place.
As for the State’s potential in wind energy, the National Institute of Wind Energy has assessed it as 33,800 MW which means that only one-fourth of the overall potential has been tapped. Even now, Tamil Nadu is ahead of many others in the overall renewable energy production. The targets fixed by the Central government and the TNERC for wind and solar in terms of share of gross energy consumed are being met with every year. “Though the targets are becoming stiffer and stiffer, we are taking every step to fulfil them,” another official says. Apart from its proposal to establish a solar plant of 500 MW in Kadaladi of the Ramanathapuram district, the Tangedco has plans to procure 1,500 MW each from solar and wind power producers. The facilities for power transmission are being upgraded annually, the officials say, recalling how about 5,000 MW of wind power was evacuated in July last year.