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Tangedco against hike in power tariff for renewable energy

According to reports,the Tamil Nadu Generation and Distribution Company (Tangedco), the State power utility, argued against escalation of power tariff for wind energy and doing away with concessions and benefits to the sector.

At a stakeholders meeting organised by the Tamil Nadu Electricity Regulatory Commission, the statutory regulator, for considering their views on revision of power tariff for wind, biomass and bagasse-based cogeneration plants, the representatives from the utility argued against extension of preferential tariffs.

Industry representatives across sectors pushed for a hike in tariff in line with the escalating costs. They were also critical of the delay in payments which ranged from several months to over a year.

Senior officials of the utility pointed to the poor financial condition of the utility and its inability to pay higher tariffs. Even a small hike could affect the operations of the utility. Also, though wind energy has helped address the shortage of power in the State, the utility cannot afford to continue with the ‘promotional tariff’ simply because it was from a renewable source.

According to official estimates, the State power utility is losing over Rs 9,741 crore a year, its accumulated losses as of March 2012 was Rs 50,000 crore, it owes Rs 45,000 crore to banks and lenders and over Rs 11,000 crore to suppliers and power companies.

The officials said incentives to renewable energy had contributed to the installed capacity of wind energy reaching 7,000 MW, which was nearly 70 per cent as compared with the total installed capacity to conventional power plants.

The prevailing tariff, the price per unit of electricity, that the utility pays wind energy producers ranges from Rs 2.75 a unit to Rs 3.39 depending on the vintage of the wind mills.

Investors in wind energy pushed for a uniform tariff of Rs 5.32 a unit irrespective of age of wind mills. The proposed tariff should take effect from the April 2011, they said. The period of the previous tariff order announced by the Regulator in 2009 ended in March 2011.

The representatives included wind energy equipment manufacturers such as Vestas and Suzlon, associations such as the Indian Wind Energy Association, Indian Wind Turbine Manufacturers Association, and investors from the textile industry including individual mills and industry associations such as the South Indian Mills Association and the Tamil Nadu Spinning Mills Association.

The industry representatives said the capital costs have increased to over Rs 6.5 crore a MW from about Rs 5.35 crore at the time the previous tariff had been set. Increase in land costs, material costs and taxes have contributed to the increase they said.

The South Indian Sugar Mills Association – Tamil Nadu representing the bagasse-based cogeneration plants sought an appropriate hike in line with the increase in investment costs. It now ranges around Rs 6 crore a MW as compared with Rs 4.9 crore estimated at the time of previous fixation when the tariff was pegged at Rs 3.15-Rs 4.49 a unit.

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