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Tamil Nadu industry in dark on solar purchase obligation norms

According to reports, with the Solar Purchase Obligation (SPO) set to kick in from January 2013 for industrial and commercial consumers in Tamil Nadu, the details of its implementation need to be finalised for clarity, say industry representatives.

Industrial consumers with captive wind capacities are worried. To them, the SPO is an added expense even as they try to meet the 9 per cent Renewable Energy Purchase Obligation (RPO) in place under the prevailing laws . Those ‘obligated’ to meet the RPO are: distribution licensees, grid-connected captive power consumers and open access consumers.

The State Government, in its ‘Solar Energy Policy 2012’ set a minimum purchase obligation for these consumers; they would have to meet 3 per cent of their electricity needs from solar power from January 2013 and 6 per cent from 2014.

The Tamil Nadu Generation and Distribution Company estimates that over 1,000 MW of solar power generation will be needed by 2014 to meet the SPO. It plans to enter into long-term contracts with solar power producers and see adequate generation capacities in place by December 2013.

But consumers are left with limited options to meet the 3 per cent obligation from January 2013, when 500 MW of solar power will be needed. In Tamil Nadu, the installed solar capacity now is about 7 MW and about 1,000 MW across India, according to industry sources.

Under the policy, consumers can set up captive solar power generation, purchase Renewable Energy Certificates on the power exchanges or pay a ‘solar tariff’, equivalent to 3 per cent of their SPO, to the utility. But the solar tariff is yet to be fixed.

The rules and regulations need to be put in place before the system becomes operational in three weeks’ time, say industry representatives.

Pashupathy Gopalan, CEO, India, SunEdison, said details of the way the percentage obligation will be quantified, whether to be applied monthly or yearly, and percentage of electricity consumption or capacity need to be announced by the regulator, the Tamil Nadu Electricity Regulatory Commission. Consumers may need time to meet the obligation in 2013, he said.

The Tamil Nadu Spinning Mills Association, members of which own more than half the wind energy capacity of 7,000 MW in the State and meet RPO norms, are worried.

If the solar obligation is levied, it will be another load on them, according to the Association’s Chief Advisor, K. Venkatachalam.

On the REC front, Rajesh Vaidyula, Head, Business Development, RE Connect Energy Solutions, a consultant, says over 18 MW of solar photovoltaic RECs are registered on the power exchanges.

With Tamil Nadu alone set to generate a demand of about 500 MW of RECs from January 2013, the demand is bound to be steep. But enforcement and compliance are key to the SPO. In non-solar RECs, enforcement and compliance are low, he said.

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