Tamil Nadu discom halts renewable energy auctions

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Stung by the poor response to wind and solar tenders that included a maximum energy price tariff, the Tamil Nadu Generation and Distribution Co (Tangedco) has halted renewable energy tenders and will now procure power from the Solar Energy Corporation of India (SECI) to fulfill its Renewable Purchase Obligation.

With Tamil Nadu ranked fifth among Indian states for solar installations, power distribution company Tangedco suffered no-shows by developers for a 500 MW solar tender that included a Rs3 ceiling tariff and a 500 MW wind procurement with a Rs2.80 ceiling.

Tangedco, which has acquired a reputation among developers for the late payment of tariffs, said it will now source renewable energy from government-owned SECI. According to a report in The Economic Times newspaper, Tangedco will collect a margin from SECI and the new arrangement will still produce solar power for less than Rs3/kWh.

SECI set to resume operations

With the results of the general election due to be announced on Thursday, SECI will be freed up to resume policy operations that day and is expected to reissue the Tamil Nadu tenders. The expectation is that developers will prove more forthcoming, even in the presence of a tariff ceiling, because SECI has a reputation for prompt payments.

In September, Tamil Nadu issued a draft solar policy targeting a 400% jump in the state’s installed solar capacity, from 2.2 GW to 8.9 GW by 2022. According to the Tamil Nadu Energy Development Agency, 40% of the solar generation capacity of 8,884 MW would be met by household solar systems.

To ensure power distribution companies in the state met their renewable purchase obligations, the policy mandated strict penalties outlined by the Tamil Nadu Electricity Regulatory Commission which also specified gross and net FIT payments to incentivize the export of solar energy to the grid during periods of peak demand.