Consultative paper points to positive impact of multiple factors

A consultative paper of the Tamil Nadu Electricity Regulatory Commission (TNERC) has suggested a benchmark tariff of ₹2.86 per unit for wind energy and ₹3.11 per unit for solar energy, an over 30% fall from previously fixed tariffs.

The suggested tariffs are also cheaper than thermal power, whose average cost is ₹4 per unit.

TNERC, the State regulator, fixes the benchmark tariffs for procurement of wind and solar energy by the Tamil Nadu Generation and Distribution Corporation Ltd (Tangedco), the State distribution company. States are also procuring wind and solar energy through competitive bidding, a process which could drive the prices even lower than the benchmark rates.

The consultative paper has fixed a rate of ₹2.86 per unit without accelerated depreciation and ₹2.80 per unit with accelerated depreciation benefits [for wind energy].

In its last order in 2016, the TNERC had fixed the tariff at ₹4.16 per unit without accelerated depreciation and ₹3.70 per unit with accelerated depreciation; the tariff will be expiring on March 31, 2018.

“Reports broadly suggest reduction in the prices of wind power turbines to an extent of 20% in the last two years. The recent auctions show that the developers have adopted a combination of various factors that have brought down the per unit price of wind energy,” the TNERC said in the paper.

Solar power at ₹3.11/unit

For solar energy, it has suggested a tariff of ₹3.11 per unit without accelerated depreciation and ₹3.05 per unit with accelerated depreciation.

“A combination of factors – low module prices, loans with cheap rates of interest and location of projects – has led to low tariff rates to the extent of ₹2.44 per unit, in the auctions held for solar power. Since the issue of the last solar tariff order, prices of solar modules have reduced by 20%. Therefore, there is a need to have a new preferential tariff in place,” TNERC said in its consultative paper.