Tamil Nadu’s New Guidelines for Procurement of Wind Power

The control period for the order is until March 31, 2022

October 9, 2020

/ Wind

The Tamil Nadu Electricity Regulatory Commission (TNERC) has issued an order with detailed guidelines for wind power procurement. The order provides details on mode of power procurement, energy banking, transmission, wheeling, scheduling, and system operation charges.

The order has come into effect from October 07, 2020, and the control period will be until March 31, 2022. The tariff period will be as per the bidding guidelines.

The order said that the procurement of wind power by distribution licensees (DISCOMs) for the compliance of renewable purchase obligation (RPO) targets would be done through the competitive bidding process. If the bidding is not successful, the DISCOM may go for bidding without prescribing a cap after obtaining the Commission’s approval. The DISCOMs can also procure power from projects contracted through a competitive bidding process by the Solar Energy Corporation of India (SECI).

For projects up to 5 MW, the DISCOM may conduct a separate bidding process after getting approval from the Commission.

The Commission said that the sharing of clean development mechanism benefits should be at 100% in the first year for the developer and, after that, reduced by 10% every year until the sharing becomes equal (50:50) between the developer and consumer. If the rates obtained through competitive bidding are comparable and below the variable cost of power from conventional fuel-based power sources, the licensee can procure power above the RPO limit.

Banking Charges

In its order, the Commission noted that the banking facility would continue with the banking period of 12 months from April 01 to March 31 of the next year for the projects commissioned by March 31, 2018. The applicable banking charges for these projects would be 14%.

The unutilized banked energy as of March 31 of the year may be encashed at the rate of 75% of the applicable wind energy tariff fixed by the Commission for existing normal wind energy captive users.

For projects commissioned on or after April 01, 2018, the energy banking facility will be for one month. There would be no banking charges. The purchase of excess generation or unutilized banked energy will be at 75% of the respective wind energy tariff for usual wind energy captive users at the end of the month. For captive generators under the renewable energy certificate (REC) program, the unutilized banked energy at the end of the month can be encashed at the rate of 75% of the pooled cost of power.

There would be no facility of banking of energy for third-party power purchase.

Mercom’s Regulatory Updates on Renewables in India keeps a close tab on all state and central orders and regulations. Recently, the Tamil Nadu Electricity Regulatory Commission asked the state DISCOM to pay for the unutilized banked energy to Arulmozhi Spinning Mills Private Limited. The Commission noted that the payment for unutilized energy and cross-subsidy surcharge collection were two different issues and cannot be linked together. The Commission stated that it was not fair on the part of TANGEDCO to withhold payment for unutilized banked energy on the grounds of non-payment of cross-subsidy surcharge.

Transmission, Wheeling, Scheduling and System Operation Charges

The Commission has also decided to retain the levy of transmission, wheeling, and scheduling, and system operation charges at 50% of that applicable for conventional power. For wind generators availing RECs, 100% of the charges specified in the Commission’s relevant orders will apply.

The Commission has decided to retain the levy of cross-subsidy surcharge at 60% of that applicable to conventional power. Once the deviation settlement mechanism (DSM) is implemented, the DISCOM must record the time block-wise generation and consumption during the billing period.

In June 2019, Tamil Nadu State Load Dispatch Centre and TNERC had issued the procedure for forecasting, scheduling, and DSM for wind and solar generation.

The Commission directed the DISCOMs to furnish a monthly report of generation of wind energy, banked and unutilized units, energy wheeled for captive consumption, third-party sale, and the power purchased by the 10th day of every month.