According to reports, the Tamil Nadu Electricity Regulatory Commission (TNERC) move to hike the cost of “banking” power with the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) rather than do away the concept of banking itself has come as a relief to wind power producers.
Beginning August 1, wind power producers have to pay 94 paise per unit to TANGEDCO if they wish to store electricity they produce with the state utility. Transmission charges too have been upped to 20 paise per unit. Taxed added, wind power firms now need to pay Rs 1.45 paise per unit to TANGEDCO as banking charges, which is at least 300 times more than the 45 paise per unit they were paying until now.
But wind power producers are heaving a sigh of relief since TANGEDCO had initially proposed withdrawal of the banking concept which lets producers store surplus power with it when wind energy production peaks (May to October) at a nominal cost and reclaim it whenever they needed (January to May) to TNERC. During the windy season, wind mills contribute 30% of power produced in the state. It is estimated that Tamil Nadu, one the largest wind energy producers in the country, has the potential to increase power generation from wind.
The state wind power policy was tailor-made to attract investment in what was a sunrise sector. The banking system itself was meant to facilitate industries to invest in windmills. Since wind power was a seasonal affair and the windy areas far from where the industries existed, investors were allowed to bank the power produced at their units with TANGEDCO for a fixed 5 per cent, which worked to 18paise per unit. With transmission charges and taxes, the firms paid just 45 paise per unit to bank with the state power utility. This subsidized rate was bleeding TANGEDCO to the extent of Rs 1,200 crore, according to sources.
“Tamil Nadu is the only state to provide power banking system. But the present condition is that wind energy producers are not able to consume the entire power they produce during the season. Even TANGEDCO is not able to consume it fully because of fluctuating demand,” said a TANGEDCO official.
Indian Wind Mills Association chief K Kasturirangan welcomed the TNERC move. “The producers have been demanding the corporation to increase the charges instead of doing away with the power banking system. This would have helped the corporation to increase their revenue by selling the banked energy to customers,” he said.
The hiked rates, sources said, would help TANGEDCO reduce its losses. If the state power utility could earn just about Rs 80 crore from producers, the new rate would help them to collect up to Rs 600 crore, Kasturirangan said.
This should offer some relief to TANGEDCO since the state utility has to purchase power at a much higher rate when wind energy producers claim the “banked” power. But doing away with the banking system would have affected the power producers who have made substantial investment in setting up windmills.
However, most of them use only 50 per cent of the power they produce immediately and bank or sell the rest to TANGEDCO. Kasturirangan said that TANGEDCO owe producers Rs 3,400 crore in arrears for the power it has purchased from them.