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Tangedco to verify captive wind power units compliance- Losses from wind power expected to be Rs 10 billion

According to reports, the Tamilnadu Generation and Distribution Company (Tangedco) has asked its Chief Engineers to verify whether or not the captive wind power producers have been complying with the minimum ownership and consumption rules.

In a recent circular, Tangedco has told the Chief Engineers to “take appropriate action for non-fulfilment of the norms.”

‘Captive generating units’ are those that produce power to supply to the owners of the units. To qualify to be called ‘captive units’ – and, thereby, get the benefit of concessional wheeling charges – they have to conform to two rules. First, not less than 26 per cent of the ownership is to be held by the captive users and second, not less than 51 per cent of the annual electricity generated should be consumed by the owners.

Tangedco apprehends that the captive wind power producers are violating these norms. Industry watchers say that some companies have got around the ownership norms by using preference capital and convertible instruments.

A senior official of Tangedco told Business Line that there was a mismatch between the supply and consumption of electricity by the captive plants — hence the directive to the Chief Engineers.

Wind power, a headache

This move should be viewed in the light of the state-owned utility hardening its stance against the wind energy sector in the State, which it holds to be at least partly responsible for the dire financial straits that the Tangedco is in today. The body has accumulated losses of over Rs 50,000 crore.

A senior official of Tangedco told Business Line that doing business with the wind power sector in the State causes Tangedco a loss of about Rs 1,000 crore a year.

The state generation and distribution utility wants the ‘banking facility’ to be scrapped. ‘Banking’ enables a wind power producer to put in electricity into the grid and draw it back at a time of his choice within the end of that financial year.

Tangedco believes that due to the difference in price they pay the producers and the price at which they have to procure from the market to supply back to them, it sustains a huge financial loss.

Further, the captive units are allowed a 5 per cent wheeling loss, whereas Tangedco itself faces 18 per cent transmission and distribution loss. On the 6,000-odd million units of electricity generated by captive wind producers, it sustains a loss of close to Rs 500 crore.

“The situation has become unmanageable,” the official said.

Wind cartel

Tangedco also suspects that the wind turbine manufacturers are in a cartel, and that is responsible for keeping the turbine prices high. An official of Tangedco said as much in a presentation he made to the Tamil Nadu Electricity Regulatory Commission at a “stakeholders’ meeting” on June 8.

Tangedco believes that the price of wind turbines ought not to exceed Rs 4.50 crore a MW. Power project developers, on the other hand, feel that the turbine prices have gone up to between Rs 6 crore and Rs 7 crore a MW.

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