EFYTimes takes a look at the play behind TNERC’s solar order getting rejected.
Saturday, January 25, 2014: The Appellate Tribunal for Electricity (APTEL) has put aside the Tamil Nadu Electricity Regulatory Commission (TNERC) solar order. This development is a big setback for the development of solar power in Tamil Nadu as the state is set to do the bulk of solar power capacity additions in India in the present year.
As cited on thehindubusinessline.com, working on a petition filed by the Tamilnadu Spinning Mills Association, that stated it was stressed over the order’s mandate that industries require to purchase certain quantities of solar power that is expensive.
Solar purchase obligation – On 19 October 2012, the Tamil Nadu Government brought about its ‘solar policy’ that sought to create 3,000 MW of solar power capacity in the State by 2015. The highlight of the order is the ‘solar purchase obligation’. There were certain categories of consumers who needed to attain 6 per cent of their consumption (3 per cent in the first year) from solar power plants. This SPO therefore is geared to creating a demand for solar power, and is hailed as a model for other states to copy.
Tamil Nadu’s Government’s policy directive – The Tamil Nadu Government’s ‘policy directive’ had been issued under Section 108 of the Electricity Act, 2003, empowering state governments to issue certain directives “in matters of policy involving public interest”. With respect to directives under the sections, the state regulatory commission “shall be guided by” the State Government and in case there is a question regarding what is a matter of public interest, “the decision of the State Government shall be final”.
Subsequently, TNERC issued a suo moto order, titled ‘Issues relating to Tamil Nadu Energy Policy, 2012′, which technically stretched the State Government’s solar policy. APTEL has now set aside this order.
Implications – The previous year, the Tamil Nadu Government-owned electricity generation and distribution utility had come out with a tender inviting bids from those who want to put up solar power projects in the State and sell the power to TANGEDCO at prices established in the bidding process. Consequently, today there are projects valued at 700 MW which await the signing of ‘power purchase agreement’ with TANGEDCO — at a price of Rs 6.48 per kWhr, with 5 per cent annual escalation for a decade.
