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APTEL’s verdict not the end of the road for solar industry in Tamil Nadu

According to reports, after the initial shock, the solar industry is slowly beginning to realise that the APTEL verdict setting aside the mandated solar energy purchases in Tamil Nadu does not, after all, mean the end of the road for the industry in the State.

Not surprisingly, the primary source of comfort seems to be their faith in the Chief Minister of Tamil Nadu Jayalalitha.

That ‘she will find a way’, since she is a proponent of solar energy, was articulated by many industry players, but none of them was willing to be quoted on this.

However, even going beyond this faith, basic calculations show that solar is not unmanageably costly . The incremental cost, therefore, means less than 2 per cent increase on Tangedco’s power purchase bill.

This calculation could be extended for future years too. Further, even this additional expenditure could be defrayed by a ‘green cess’– calculations show that something like 10 paise would happily suffice. A cess, being a Government’s right, can be brought in straightaway. (However, a counter here is that a ‘green cess’ does not assure bankers of a steady source, as the next Government could scrap it.)

Basant Jain, CEO, Mahindra EPC Serivces, which wants to put up a 200 MW solar plant in Tamil Nadu, observes that Punjab, Gujarat, AP and Bihar have come out with solar policies, offering rates similar to that of Tangedco’s.

He further argues that TNERC can raise the solar component of the ‘renewable purchase obligation’. Vineet Mittal, Co-Founder and MD of Welspun Energy, says the RPO itself could engender substantial capacity creation.

Incidentally, TNERC had come out with a consultative paper indicating tariffs at which one could put up a solar project in the State and sell the power to Tangedco. For large scale plants, the paper suggests a flat tariff of ₹5.78/kWhr.

While the suggested tariff drew shrill protests, some in the industry said solar projects was doable at that rate, if the project developer was in a position to use the tax-saving ‘accelerated depreciation’ benefit.

Well, even if this is raised to, say, ₹6.20, Tangedco could meet its renewable purchase obligations buying this power, and sell it at a modest mark-up.

Furthermore, a petition for revision (hiking) of tariff has been submitted by Tangedco to the State electricity regulator, TNERC. Once approved, the higher tariff will give Tangedco the wherewithal to pay for solar power purchases.

The Tangedco bid of last year has resulted in projects worth 700 MW ready to be put up and these projects are awaiting the signing of the power purchase agreement.

Looking at all these points in totality, the solar industry is now of the belief that, SPO or not, the utility would go ahead with its solar programme.

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