Indian State Of Tamil Nadu Gets Approval To Float 500 MW Solar Power Tender

One of India’s leading states in terms of installed solar power capacity, Tamil Nadu, will soon float a huge solar power tender with an intention to meet solar power purchase obligation.

The Tamil Nadu Electricity Regulatory Commission (TNERC) recently granted approval to a proposal by the state’s power utility to float a 500 MW solar power tender. Tamil Nadu Generation and Distribution Corporation (TANGEDCO) had approached the commission to let it auction this capacity as it would not be in a possible to meet the assigned target to acquire 5% of electricity from solar power projects for financial year 2017-18.

According to government estimates, an installed capacity base of 2.5 GW will be required to meet the 5% solar RPO target in 2017-18. TANGEDCO, however, expects that only 1.6 GW solar power capacity would be operational by that time, thus leaving a shortfall of 900 MW.

While the commission agreed to the utility’s proposal to auction 500 MW capacity neither clarified about the shortfall of 400 MW that would still remain. TANGEDCO may look to acquire Renewable Energy Certificates or RECs generated by solar power projects across India that are available for trading every month.

The commission also specified the benchmark tariff for the auction. Project developers will participate in a reverse auction with the highest possible bid of Rs 5.10/kWh (US$7.6/kWh). TANGEDCO expects that the actual bids could be much lower. The current lowest tariff bids in India are around Rs 4.35/kWh (US¢6.4/kWh).

Tamil Nadu enjoys significant solar radiation and has ample land resources to set up large-scale solar power projects. However, the developers would certainly by concerned by the transmission constraints that exist in the state. Developers of some operational renewable energy projects had recently complained to the Ministry of New & Renewable Energy that the state utility had asked them to curtail generation due to lack of sufficient transmission capacity. The ministry did issue guidelines in favour of the developers stating that wind and solar power projects have a ‘must-run’ status and in case of any transmission constraints, the utility must first ask the thermal power projects to reduce generation.

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