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Tamil Nadu offers competitive price for solar power,gets 90 bidders

According to reports, at a time when Tamil Nadu is reeling under an acute power shortage,nearly 90 prospective investors have evinced keen interest in setting up solar power plants in the state.The states power utility Tangedco has offered to purchase solar power at Rs 6.48 per unit.Negotiations are underway with potential investors, said a senior Tangedco official.

Industry experts say there is no doubt Tamil Nadus solar policy is among the most ambitious in the country. RESolve Energy Consultants director Madhavan Nampoothiri said the states target of 3,000MW in three years is far higher than even the Centres Jawaharlal Nehru National Solar Mission (JNNSM) first phase target of 1,000MW in three years.

In comparison,Gujarat had signed power purchase agreements (PPA) for close to 1,000MW in 2011 and Andhra Pradesh is targeting 1,000MW this year.Punjabs renewable energy policy announced in December 2012 targets 1,000MW of solar power capacity by 2022.

With solar energy being considered a viable option,the Tamil Nadu governments solar policy unveiled in December last year offers attractive tax incentives to lure investors from within the country and abroad. The bidders have shown interest to set up solar plants in Krishnagiri, Ramanathapuram, Tuticorin, Sivaganga, Trichy, Virudhunagar and Tiruvannamalai. While Tangedco called for tenders for producing 1,000MW power for 20 years, bids have come for nearly 499MW,and each bidder has quoted between 1MW to 60MW.

Tangedco offer is in line with global markets,especially the US,where the price offered for solar power is around 10 to 11 cents per unit,which is around Rs 6, said Praddin Energy Private Limited chief executive officer Pradhish Kumaar, one of the bidders.As it is a global tender this has attracted some foreign companies as well,for whom India is a better place to do business right now,he said.Gujarat,a leader in solar power,offers a tariff of around Rs 8,but this was fixed more than a year ago,and costs of setting up a power plant have come down by about 20% since then.

Disputing certain aspects of the solar power purchase tender,a firm has gone to the Madras high court for remedy.

But investors say Tamil Nadu’s price is attractive.They can avail themselves of the accelerated depreciation scheme in addition to the tariff offered. The tariff offered by Tangedco is competitive with those in other states like Andhra Pradesh or Orissa where bidding is currently on, said Vineeth Vijayaraghavan,an industry expert.

Also,Tamil Nadu offers a 5% escalation on tariff from the second year,in which case the investor would get Rs 9.75 per unit in the tenth year and that would remain for the next ten years.


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