Tamil Nadu Lays Out Details for Procuring Solar Power by Distribution Licensees

The last date for the submission of suggestions is March 13, 2020


The Tamil Nadu Electricity Regulatory Commission (TNERC) has issued a consultative paper for procuring solar power by distribution licensees and has asked all the stakeholders to submit their comments and suggestions by March 13, 2020.

The report states that the total capacity of renewable power in the state is 14.14 GW. According to Mercom’s India Solar Project Tracker, the state has nearly 3.6 GW of large-scale solar installations while 208 MW are in the development pipeline.

Preferential tariffs played a major role in promoting solar power in the initial stage. Over the last few years, there has been a shift from the feed-in tariff regime to tariff-based competitive bidding and reverse auctions. The tariffs obtained through competitive bidding and reverse auctions have hovered around ₹3 (~$0.042)/kWh.

In the consultative paper issued by the Commission, it has proposed the procurement of solar power by distribution licensees through the competitive bidding process following the bidding guidelines issued by the central government (which is already happening). The power can also be procured from the projects contracted through a competitive bidding process by SECI to comply with their renewable purchase obligations (RPO) targets.

Transmission, wheeling, and scheduling & system operation charges are generally regulated by the Commission’s tariff and open access regulations. The Commission has proposed to levy 100% of the charges applicable for conventional power in each of the charges (transmission, wheeling charges, scheduling, and system operation charges).

In the proposed tariff order, the Commission has proposed to levy 100% of cross-subsidy surcharge applicable to conventional power.

The Commission has also proposed that any power drawn during the non-generating period of solar power (beyond 7.00 AM to 6.00 PM) will be charged at high tension (HT) industrial tariff. Power drawn during the solar generating period of 7.00 AM to 6.00 PM in excess of generation will also be charged at HT industrial tariff.

If the energy drawn by the captive user or third-party buyer exceeds the generation, the energy and demand charges will be regulated as per the Commission’s open access regulation and the deviation settlement mechanism (DSM).

If a solar power generator utilizes power for captive use or sells it to a third party, the distribution licensee will raise the bill at the end of the billing period for the net energy supplied.

The wheeling of energy for solar power will be permitted only during the generation of electricity and will be adjusted for the billing period.  Excess consumption will be charged at the tariff applicable to the consumer.

After the billing period, the excess energy generated but not consumed (subject to the cap fixed) can be sold at the rate of 75% of the respective solar tariff fixed, and where no tariff is fixed, it can be sold at 75% of the lowest tariff discovered during the year through competitive bidding process.

The solar capacity contracted by open access consumers (including captive) will be such that there is no excess generation over the annual consumption. Any generation in excess of 10% of annual consumption in a financial year will not be considered for the payment of unutilized energy.

Regarding the security deposit to be paid by captive and third party users, the Commission has proposed to retain the present arrangement. According to the current arrangement, charges corresponding to two times the maximum net energy supplied by the distribution licensee in any month in the preceding financial year will be taken as the basis for the payment of a security deposit.

This order will be effective from April 01, 2020.

In June last year, the Tamil Nadu State Load Dispatch Centre (TNSLDC) and TNERC had issued the procedure for forecasting, scheduling, and deviation settlement mechanism of wind and solar generation. The procedure aims to establish guidelines to help maintain grid discipline and grid security under the grid code through the commercial mechanism for deviation settlement through drawl and injection of electricity by the users of the grid.

Earlier, the state fixed the generic tariff for solar procurement in the state. The TNERC had set ₹3.04 (~$0.044)/kWh without accelerated depreciation (AD) and ₹2.80 (~$0.040)/kWh with AD as the generic tariff for solar PV in Tamil Nadu. The tariff came into effect from April 1, 2019.

Mercom previously reported that the Tamil Nadu Energy Development Agency (TEDA) had issued the state’s Solar Energy Policy 2019. The policy targets 9 GW of installed solar capacity in Tamil Nadu by 2023.


Image credit: EDF Renewables


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