07 November 2012
Tamil Nadu state is often dubbed the “Detroit of India” because it is among the top 10 global auto manufacturing hubs, is one the most developed states in India with an annual growth rate of 8% as compared to national average of 7.4%. The state has an aggressive plan to increase manufacturing so that the gross domestic product is 23%, compared to today’s 17%. It comes as no surprise that the significant economic development has created a power deficit.
The Tamil Nadu government relies on wind with 12.64% (9763 MU) of the energy used was generated by wind farms and 14.9% from all renewable sources in 2011-12. But it is not enough. As a result of the power shortage, industries have had to reduce production. Households that rely on power for day to day activities are also suffering.
To overcome the reduced power generation from thermal plants due to prevailing coal shortages and from the seasonality of wind power plants, Tamil Nadu has a goal to install 3000MW solar capacity by 2015 (1GW each year) to be energy secure, reduce carbon emissions and become a solar industry hub. The wind power leader state having 40% share in national wind installation, plans to tap all 3 solar segments
Utility scale solar projects (1000MW) will be developed through reverse bidding where developers will make competitive bids with respect to a base tariff released by the government for bidding. This will be backed by Solar Power Obligation (SPO will require 1000MW by 2015), which is set at 3% until December 2013 and 6% from January 2014 for high tension consumers, which are mainly commercial, administrative, institutional and industrial consumers. 500MW in utility scale will be based on generation-based incentive. REC mechanism based commercial projects will also be developed where REC certificates along with power sale or captive consumption will be applicable. Promotion of decentralized solar plants in Industrial Estates is highlighted in the policy, which will be the most sought-after solution for the already struggling manufacturing industry with inadequate power supply.
Tamil Nadu becomes the first state in India to tap the domestic segment in rooftop solar projects (50MW), where it has planned to offer generation-based incentives for the power generation for the first 6 years. This will require the government’s support for net metering at multiple voltages for domestic rooftops, which is considered a challenge by industry experts. Also, solar water heaters will be mandated in government/commercial buildings, industries and houses.
A regional solar manufacturing hub
Tamil aspires to be a complete solar manufacturing industry hub from wafer to module making and balance of system components in exclusively developed solar manufacturing parks and existing industrial parks. However, in light of current dismal state of domestic manufacturing sector, it will be a challenge for state to attract investors.
Challenges & solutions
The Solar Power Obligation puts a huge financial burden on those who are already paying higher commercial power tariffs. However, it would be interesting to see if the obligation creates insurmountable financial pressure or acts as driver to be self-secure in power requirements. However, challenges are always associated with any new initiative but not insurmountable. Tamil Nadu’s Solar Policy will definitely play a significant role in powering state to meet energy requirements for realizing Vision 2023.
Written by Varun Mittal, Contributing Editor, India, Solar Novus Today