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Tamil Nadu Releases Solar Power Tariff

Wednesday, August 07, 2013: The Tamil Nadu Electricity Regulatory Commission (TNERC) has released solar power tariffs. According to the draft tariffs, solar power producers in the state of Tamil Nadu will receive Rs 5.78 per unit. This is considered to be the lowest in the country. The commission will wait till 31 August before it comes up with the final tariffs because the energy regulator has invited public comments in a draft consultative paper. The comments would help in fixing final tariffs.

These guidelines do not pertain to the state’s plan to buy 1,000MW of solar power at Rs 6.48 per unit through a separate tender process. The offer of Rs.6.48 was not successful. Presently, the state of Tamil Nadu is facing acute power crisis and therefore, it wishes to tap renewable resources in order to reduce the 2000MW deficit. There is no dearth of sunshine and hence it can tap solar power.

According to TNERC’s paper, draft tariffs were fixed keeping in mind that the cost of establishing solar power plants was going down. Hence, the setting up of a 1 MW of power plant required just Rs.7 crore. But, solar power producers claimed that the assumption was incorrect.

“A year back, solar thermal prices were lower than solar PV but now it is the other way around. With an influx of solar module manufacturers, there has been a notional drop in module prices which people have mistaken for a technological advancement. This price of 5.78 is viable only if the project cost is 6 crore but that is not the case now. This price is more a distress model than a viable model for solar companies,” said K E Raghunath, Managing Director, Solkar Solar Industries, The Times of India reported.

The draft guidelines recommended that power produced with the help of solar thermal be fixed at Rs.8.34. The Times of India reported “the capital cost of solar PV is fixed at 7 crore and for thermal it is 11.5 crore. The capital cost of solar power projects is falling and it is currently much lower than the CERC rate fixed at 10 crore in 2012,” the paper highlighted. The tariff has been fixed after taking into considerations The cost of capital, maintenance, depreciation etc., were taken into consideration before fixing the tariff. “The commission has carried out a detailed analysis of the existing procedures and policies before arriving at the unit cost,” the consultative paper pointed out.

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