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Tamil Nadu order on renewable energy leaves industries dissatisfied

According to reports, the Tamil Nadu Electricity Regulatory Commission has announced new tariff for renewable energy including wind energy, bagasse-based cogeneration plants and biomass based power plants.

However, the tariff rates have left the industries largely disgruntled as they say it only increases cost for power generators or cuts down their revenue and benefits only the State power utility, the Tamil Nadu Generation and Distribution Corporation.

Wind energy and bagasse-based cogeneration industry are contemplating appealing against the order applicable for a two-year control period from August 1, 2012, and a tariff period of 20 years.

The commission has set the wind energy tariff at Rs 3.51/unit of electricity sold to the utility for wind mills commissioned from today.

Tariff for machines in operations will remain the same – Rs 2.75 for wind mills commissioned before May 15, 2006; Rs 2.90 for those commissioned between May 15, 2006 and September 18, 2008; and Rs 3.39 for mills that started later and up to July 31, 2012.

Captive power consumers find that their electricity bill has gone up by Rs 0.95 a unit.

The commission has slashed the power tariff for sugar mill linked cogeneration plants commissioned from today to Rs 3.76 a unit while retaining the higher tariff of Rs 4.47 a unit for older plants commissioned between 2009 and 2012.

For biomass-based plants, the tariff is pegged at Rs 4.69 a unit and Rs 4.86 a unit for the first two-years. This includes a variable cost of Rs 3.03 a unit and Rs 3.18 a unit for the two years applicable to all plants commissioned on or after May 15, 2006.

The fixed capacity charges range between Rs 1.65 to Rs 1.58 a unit for the tariff period of 20 years applicable to biomass-based plants commissioned on or after August 1, 2012.

Wind energy generators and captive wind power consumers have expressed discontent over the tariff rates.

The Tamil Nadu Spinning Mills Association, which represents a majority of the captive wind power consumers, felt that the tariff order will discourage wind energy investments in the State. It has hiked the charges collected by the utility, which will benefit by about Rs 600 crore this year alone.

An industry representative pointed out that in most States wind energy tariff ranges over Rs 4 a unit. But in Tamil Nadu the tariff is not supportive.

Sugar industry representatives said it was ‘baffling’ and ‘disappointing’ that the commission had actually lowered the tariff for cogeneration power despite the growing costs. The order will have to be studied in detail before further course of action can be taken, they said.

The biomass based power generators pointed out that there were no new projects in the pipeline and therefore it was an academic exercise for the existing biomass-based power plants.

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