More questions arise on solar power purchase

Chennai: Has the TN generation and distribution Corporation violated the TN Electricity Regulatory Commission’s direction to not to procure solar power in excess of solar renewable purchase obligation (RPO)? Tangedco has signed power purchase agreements with 43 companies for a total quantum of 1,214 MW of solar power including Adani’s 648 MW plant in Ramanathapuram to procure power at a cost of Rs 7.01 per unit. Even if one goes by the proposed increase in the solar RPO limit to one per cent by TNERC, Tangedco need not sign PPA for more than a 477 mw of solar plant. At present, the state has about 120 mw of solar power capacity

While fixing the tariff for solar power on September 12 last year, TNERC had directed Tangedco to purchase solar power at the rate determined by the commission from the companies for their RPO requirement on “first come first served basis.” “Purchasing solar power at the prevailing cost by the distribution licensee beyond certain quantum will correspondingly increase the overall retail tariff to the consumers on account of the preferential nature of tariff. Renewable energy has to be promoted but at the same time the interest of the consumers shall also be taken into account. Therefore for any procurement in excess of Solar RPO by the distribution licensee, specific approval shall be obtained from the commission,” said the order issued by the full bench of the commission, including its rebel member S. Nagalsamy.

As of now, the RPO fixed by TNERC stands at 9 per cent for all sources of renewable energy put together and 0.05 per cent for solar separately. TNERC has proposed to increase the RPO to 11 per cent including one per cent from solar

TNERC, in its suo-motu tariff order, estimated energy consumption for 2014-15 at 64,876 million units and determined solar RPO requirement at 32 million units. Even if the state’s energy consumption goes upto 71,500 MUs in 2015-16 considering 10 per cent annual growth, the present Solar RPO requirement will be mere 35.75 MU. If the Solar RPO was increased to one per cent by the TNERC, then the requirement will be 715 MU.

If one goes by the thumb rule, one mega watt of solar power capacity in Tamil Nadu will generate 1.5 MUs. The state would require to purchase power from only 477 mw of solar power plants. Unless the Commission issues an order revising the RPO, the previous year’s RPO limit will be followed.

“By purchasing solar power at high cost exceeding the RPO limit, it would only affect the debt ridden Tangedco's financially. This in turn will be transferred to the consumers through tariff hike,” sources in the TNERC said, adding that Tangedco is going ahead signing PPAs to purchase power at Rs 7.01 per unit even as solar power touching new low of Rs 5.05 per unit in Madhya Pradesh. Tangedco purchasing high cost solar power in excess of RPO is violation of TNERC direction, sources said.

Sources in the government said that TNERC did not fix any upper limit for purchasing solar power. “In the solar tariff order itself they have mentioned that excess RPO is allowed. For that Tangedco should file a petition and get approval for excess RPO if any,” the sources said, adding that the RPO is fixed based on capacity addition. “Before December, we don’t expect more than 500 mw coming into grid. As and when capacity increases only RPO will be fixed. All these PPAs will be operational by next year only,” sources said.