Lack of clarity on power tariff worry for solar companies

CHENNAI: The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved a draft power purchase agreement (PPA) for the state electricity utility Tangedco to buy solar power from private power producers, more than four months after the TNERC announced a feed-in tariff of Rs 7.01 per unit of power for solar power companies wish to generate and sell power to the state electricity utility.
While the release of the PPA is meant to signal a positive turn of events for the solar sector in state, in reality, there would be no action on the ground, solar power companies say.
Solar power producers point to several ambiguities in the power purchase agreement, the biggest being the absence of the tariff to be paid by the Tangedco to solar power producers.
“There is no clear mention of the tariff and no reference to which tariff order will be followed for the PPA,“ says D Arumugam, a power consultant and director at Marigold Steel and Power. Even if one were to assume that this refers to the recent tariff order promising Rs 7.01 per unit of solar power, it is practically difficult to adhere to the rules given in the tariff order.
“The Rs 7.01 tariff is applicable only to plants set up before September 2015 and it is almost impossible to do that as only companies that have the land, funding and loadflow studies ready can sign the PPA and not many companies now have it,“ Arumugam says.
“The current Rs 7.01 is amongst the highest solar tariffs in the country and any tariff that will be fixed after this will only be lower. Since most companies won't be able to make it by September 2015, we will only get a low rate,“ a solar power producer said.
Also, there is no clarity on when and who will be called for signing the PPAs. “Once the approval is given by TNERC, Tangedco has to call companies to sign it, and there is no clarity on which companies will be allotted how much capacity ,“ a power producer said.
The companies could either be the ones who migrated from a tender that was announced as part of the Tamil Nadu Solar Policy 2012 or new companies who applied after the new tariff of Rs 7.01 was announced in September 2014.