TN promises to pay up for solar power dues

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Tamil Nadu has promised the solar power producers that it will pay the dues to them. The promise comes on the fact that the state electricity board already owes Rs 10 billion to the wind energy sector. The state is looking to add around 3,000 MW of solar power in three years.

These plans were clarified by K Gnanadesikan, managing director, Tangedco, who said, “The main part of the project is that the payment is guaranteed and there will be a payment support mechanism as a letter of credit and the bid will be on the basis of a rate contract.” The state has directed Tangedco to provide 1,000 MW this year, which will be supplied to high tension and LT industrial and commercial establishments. The document for the bid is expected to be issued within 10 days. The companies looking to bid should have atleast Rs 10 million net worth per MW.

The process will be decentralised so that anywhere in the state, the plant could be set up. “The government will not help with land acquisition for the project and there won’t be any subsidy for the 1,000 MW and we will enter into a 20 year power purchase agreement,” said Gnanadesikan.

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He added, while the purchase of power will commence only in 2013-14, the distribution company will increase price by five per cent every year up to 10 years.

Most of the firms are excited by government’s policy, which has set a target of 3,000 MW capacity, which needs to be established by 2015-end, but some of the them are concerned with the rate contract, which could directly have an impact quality of power generated.

Other industry officials have complained about government’s decision not to intervene in land acquisition, which could be another bottleneck. Also, there will be no support from the Government on financial.

The state government has mandated for the HT industrial and commercial consumers to use solar power, under solar purchase obligation (SPO), which has been fixed at three per cent for 2013 and six per cent for 2014 out of their total energy consumption. The target can be met only if solar plants are set up by the producers.

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