Tamil Nadu Sets ₹3.97/kWh, up 7.29% YOY as Pooled Cost of Renewables’ Power

The Tamil Nadu Electricity Regulatory Commission (TNERC) has come up with the fixed tariff of ₹3.97/kWh as the pooled cost of power purchase that the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) will pay to the generators of non-conventional energy sources (NCES), this fiscal.

‘Pooled cost of power purchase’ means the weighted average pooled price at which the distribution licensee has purchased the electricity including cost of self-generation in the previous year from all the long-term energy suppliers, but excluding those based on liquid fuel, purchase from traders, short-term purchases and renewable energy sources subject to the maximum of 75% of the preferential tariff fixed by the Commission to that category / sub category of NCES generators

The following implies that TANGEDCO will have to pay either Rs.3.97/kWh or 75 percent of the preferential tariff (whichever is less) if it procures from renewable energy generators. This order has been in effect from April 1, 2018.

The pooled cost of power payable by TANGEDCO has been fluctuating after 2016. In FY 2015-16, the cost was set at Rs. 3.35/kWh, which then rose to Rs. 3.96/kWh in FY 2016-17, then falling to Rs 3.70 /kWh in the last fiscal year.

The new pooled cost of power purchase for TANGEDCO is Rs.0.27/kWh more than the pooled cost of power purchase fixed for the previous financial year.

The rise of 7.29% in the pooled power purchase cost, according to the sources, is depended on all power drawn from all sources. This time around the number of PPAs for cheaper power sources like solar and wind were not signed as much as compared to the previous fiscal. Coal drawn power is not cheap. The cost of coal plants is increasing, and the amount of power drawn from them was more compared to other sources leading to a spike in the pooled power purchase cost.

India’s thermal coal imports rose by 8 percent and coking coal imports by about 13 percent for the year to March 31, government data shows.

Last fiscal when the pooled power purchase cost had gone down, the DISCOM has been buying more of low-cost power (from solar wind farms and other sources) and entering into long-term power purchase agreements (PPAs), thereby reducing cost, even as the demand has been on a steady rise.

According to the data with TANGEDCO, Power managers in the State are not perturbed by the peak demand, which is in the range of 15,300 to 15,500 MW a day during the April month this year, as the generation capacity without wind energy was almost 18,000 MW and the distribution network was working fine because of better maintenance work carried out last year.

More wind and solar projects are the need of the hour in Tamil Nadu and the state has huge potential for both.  The Tamil Nadu government has set a target to achieve 8.9 GW of solar installations by 2022, and will also look to promote the local manufacturing of solar components.