In the second half of 2020, K Ganesh, a small business owner near Dindigul, invested around ₹5 crore to set up a megawatt (MW) sized rooftop solar unit at his factory. The project was part of their long-term plan to move away from the state-owned power utility and is steadily raising tariffs for industrial customers to a green energy source within the premises of their mill.
“We are a high-stress consumer and we are completely dependent on Tangedco for power supply,” said Ganesh business Line. “I invested in the unit assuming a payback period of 5-6 years and 15 per cent annual savings in our energy cost. The capital I have invested can also be used as a tax write-off during this period. “
However, the reluctance of the state electricity boards to approve new rooftop solar projects this year has put their plans in limbo.
“Approval from TANGEDCO (state electricity utility which is a subsidiary of Tamil Nadu Electricity Board) is pending for eight months now; So my capital is stuck till the approval is received,” said Ganesh. “We have no alternative to TANGEDCO for power supply and I do not know whether their reasons for not approving are commercial or political. Our application has not been rejected; no decision has been taken yet.”
Uninterrupted power supply, depreciation write-offs and prohibitive commercial tariffs for electricity appear to be the primary reasons why businesses in Tamil Nadu want to move away from their dependence on state-owned power utility Tangedco and set up their own private generating units. The easiest way to do this is to install a rooftop solar unit within business premises, but as Ganesh learned the hard way, this is also where the state’s installed electricity hierarchy is least willing to reduce.
Ambitious goals for rooftop solar
Rooftop solar units are a form of distributed electricity generation where homeowners, factories or businesses can install solar panels on their roofs or nearby open spaces to provide a portion of their electricity needs, separate from electricity. Otherwise the field is supplied to the building. grid. The central government has set a pan-India target of installing 40,000 MW solar rooftops by 2022. As of December 2020, a fraction of India’s capacity was about 6700 MW.
Tamil Nadu was an early mover in the renewable energy sector, leading the race with industrial peers such as Karnataka, Gujarat and Maharashtra in encouraging the first flush of solar and wind power installations. However, over the years, the state has begun to rein in its initial enthusiasm and has dropped ranking in the leaderboard of annual capacity addition in renewable energy.
In addition, Tamil Nadu currently has more restrictive policies on the installation of rooftop solar units that interact with the state grid, aggressively reducing financial incentives for Tangedco customers who wish to install their own private generation.
As of last December, Tamil Nadu has a total installed solar rooftop capacity of 537 MW, of which 75 per cent is industrial, 19 per cent is commercial and 6 per cent is in the public sector, according to data from Gurgaon-based Renewable Energy. Consultancy firm Bridge to India. While the state has made an early headway in adding capacity, recent data shows that policy changes discouraging new rooftop solar installations have slowed growth significantly. (See chart.) These policy flip-flops fly against the state’s own goal of installing 3600 MW of rooftop solar by 2023.
change incentive
“Tamil Nadu lost the lead (in rooftop solar) in 2017 as net metering was not offered after 2016,” said Vinay Rustagi, managing director, Bridge to India. “Currently only net billing is available for low-stress consumers (less than 112 kW) and no grid connectivity provision for high-stress consumers.”
Net metering and net billing are two methods of calculating compensation paid to private rooftop solar units that sell their excess private electricity generation to the grid using a bi-directional meter. In a net metering arrangement, the producer-consumer (pro-consumer) can subtract the energy (in terms of units) sold in the grid from the number of units they have purchased. The difference between these two figures is billed as per the standard slab rates. Under a net billing arrangement, Pro-Summer sells their excess energy to the grid at a standard feed-in tariff, while the energy they purchase will be charged at slab rates. Considering the huge difference between the feed-in tariff (mostly under Rs 2 per unit) and the slab rates, the savings for pro-sumers under net billing is much less as compared to net metering.
“Tamil Nadu has an ambitious rooftop solar capacity target and the state has attractive radiation and high demand from commercial and industrial consumers to set up rooftop units. But progress is limited due to these unhelpful policy measures,” said Rustagi.
loss of tangedco
Despite recent orders from the Electricity Regulatory Commission (TNERC), the state’s reluctance to approve new rooftop solar projects has hit industrial users – who pay the highest tariffs – particularly hard. If Tangedco’s cost of electricity supply averages 8.20/kWh (kWh) per unit, it needs to charge ₹11 or 12 per kWh from high-stress industrial customers, in order to lower tariffs for dwellings or agricultural users. To be compensated for free electricity.
Despite repeated requests, the chairman of the state electricity board refused to respond business Linequestions of. However, data from the Ministry of Power provides some clues as to why Tangedco’s shy away from adopting private generation of green energy.
As of June, Tamil Nadu’s electricity utility has the highest outstanding dues (₹18,370 crore) due to its primary large-scale power generators, compared to the rest of the country. The state is also at the bottom in terms of ease of payment to producers. For a utility that is already struggling to pay its creditors, to lose any business from high-value wholesale electricity customers, such as those in the commercial and industrial categories, as they switch to rooftop solar. This will only increase your financial troubles.
face to face with the regulator
Last month, TNERC directed TANGEDCO to process all pending applications from high stress industries for installing rooftop systems. However, Tangedco took the dispute further to the Madras High Court.
“Tamil Nadu is very unique in not allowing the option of net metering to high-stress consumers, where they can export surplus power to the grid. If you don’t have this facility, a lot of the energy generated is likely to be wasted,” said KR Harinarayan, founder, U-Solar Clean Energy, an engineering, procurement and construction contractor with solar rooftop clients across multiple states. works in. , said. “As a result, even though Tamil Nadu has a lot of industries and companies that have high power requirement and capital to set up rooftop units, many are reluctant to do so. Only those industries that can absorb all the electricity generated during the year, for example those that operate 24*7 like spinning mills or big auto companies, find roofing a viable option.
Moreover, excessive delay in approvals has reduced the appetite for new establishments. “There has been no high-tension approval approval from TANGEDCO this year because of the matter brought before TNERC,” Harinarayan said. “As a result, even when customers come to ask for roofing installed now, we are advising them to wait till there is some clarity in the policy. However, we are hopeful that this issue will be resolved soon.”
However, things are starting to look up after the recent regime change in the state. “With the new government, we are hoping that some restrictions on grid-interactive solar power will be resolved soon,” said Tamil Nadu Solar Energy Developers Association President P Ashok Kumar. “This week, TNERC has published draft guidelines that will allow net metering facility up to 10 kW for residential rooftop units, which is a huge advantage for small-scale users. Low-tension commercial and industrial users with solar rooftops are There are also some concessions for TANGEDCO as long as they pay ₹1.27 per kWh/hr networking charge to TANGEDCO. Looking at these new guidelines, I believe the government to find some solution for high stress customers as well. There is scope to work together.”
Boom time for housing
JB Satheeshkumar, proprietor of Kancheepuram-based Dynamic Power Systems, said that despite falling demand in the commercial and industrial categories, some contractors are seeing an uptick in residential demand for solar rooftops in Tamil Nadu. “Post-Covid, now that a lot of people are working from home, there is a great demand for uninterrupted power supply to homes and small businesses. I have been selling rooftop systems for homes in Tamil Nadu since 12 years and I did the highest turnover in 2020.
“Setting up grid connectivity with solar is complicated. Customers who sold surplus power to the grid found that they received an average of ₹1.8 to ₹2 per unit across India, depending on the lowest bids for that day. So it is not helpful if your electricity cost from grid is ₹6-7 per unit. Instead now, most of my customers are opting to include battery storage with their rooftop units even though it makes the whole set-up more expensive initially,” said Sathishkumar. “Customers are generally 1 -5 kW units, depending on their energy usage, number of equipment etc., it may be difficult to get bank loan to set up these units, but customers who can afford the upfront cost may take this route more taking and now more.”
P Suresh, a resident of a south Chennai suburb, installed a 3 kW rooftop solar unit with battery in his bungalow, where he runs a business consultancy firm, from the top floor. “I thought it would be more economical to install a solar unit than to use an inverter to run through a power cut,” he told BusinessLine. “I get about six units of electricity a day; It’s not much, but my office lights, fans and internet don’t turn off during power cuts. The benefit to me is that because it’s an asset of the company, I can write off the capital cost over its lifetime.
Tanya Thomas is a freelance journalist. Reporting of this story was supported by a grant from the Earth Journalism Network.
(Some names have been changed to protect privacy.)
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