Tamil Nadu Commission Approves Tariff of ₹2.91/kWh for 441 MW of Wind Projects

The state is expected to install 3.5 GW of wind projects by 2022

February 20, 2020

/ Wind

The Tamil Nadu Electricity Regulatory Commission (TNERC) approved a tariff rate of ₹2.91 (~$0.04)/kWh for procuring about 441 MW of wind power through the Solar Energy Corporation of India (SECI) for 25 years.

The order followed a petition from the Tamil Nadu Generation and Distribution Corporation (TANGEDCO), which requested the Commission to approve the tariff to procure power through SECI’s tender (Tranche-VIII) so it could meet its renewable purchase obligation (RPO) targets. The tariff included a trading margin of ₹0.07 (~$0.001)/kWh.

TANGEDCO cited the Ministry of Power’s (MoP) target of 175 GW of renewable energy power by 2022, of which wind power is to constitute 60 GW. Of this, TANGEDCO is expected to contribute 3.5 GW.

It stated that it expects to achieve about 2.1 GW of this target by 2021-2022. For the rest, the distribution company said it has already floated a tender to procure 500 MW of wind power at a tariff of ₹3.46 (~$0.05)/kWh, of which 450 MW has been finalized, with the power purchase agreements (PPA) signed.

However, TANGEDCO explained that it had had setbacks with this project as one of the bidders has only commissioned 49.5 MW of its promised 200 MW while the other successful bidder has not started work on its project at all. Both bidders have sought for a timeline extension from the state commission. The projects had to be commissioned by March 2019, according to the PPA.

The DISCOM also noted that as per the Commission’s previous order, it had to procure 1.5 GW of wind energy in three stages of 500 MW, each with a ceiling tariff of ₹2.65 (~$0.037)/kWh. However, because these tenders received a poor response, it appealed to the appellate tribunal (APTEL) to remove the ceiling tariff.

The DISCOM explained that, given these circumstances, the board members approved a proposal to procure 440.64 MW of wind power through SECI’s tender for ₹2.91 (~$0.04)/kWh [₹2.84 (~$0.039) + ₹0.07 (~$0.001) trading margin].

It explained that the tariff is much lower than ₹3.42 (~$0.047)/kWh set previously through competitive bidding, and comparable to the present feed-in-tariff of ₹2.86 (~$0.40)/kWh.

In its order, the Commission approved the DISCOM’s proposal to procure 440.64 MW of wind power through the SECI for 25 years at ₹2.91 (~$0.04)/kWh to help it meet its non-solar RPO targets for the year 2021-2022.

Earlier, Mercom reported that the Appellate Tribunal for Electricity (APTEL) had asked the Tamil Nadu Electricity Regulatory Commission to pass a new tariff order for power procured from renewable sources. This judgment comes in the wake of petitions filed by the National Solar Energy Federation of India Limited and Welspun Renewables Energy Private Limited, challenging the state’s tariff order.

Previously, the Tamil Nadu Electricity Regulatory Commission invited suggestions and comments on the proposed amendments to its renewable purchase obligations. The Commission was mandated to set RPOs for the financial years 2019-20, 2020-21, and 2021-22. The Commission has already notified the RPO for the financial year 2017-18 in its regulations.