Shadow casting: Tamil Nadu’s restrictive policies hamper rooftop solar growth
In the second half of 2020, K Ganesh, owner of a small business near Dindigul, invested nearly 5 crore to install a megawatt (MW) sized rooftop solar unit at his factory. The project was part of his long-term plan to move away from electric utility service and his tariffs for industrial customers are steadily increasing towards a greener source of energy at his factory premises.
“We are a high voltage consumer and we only depend on Tangedco for the power supply,” Ganesh said. Activity area. “I invested in the unit assuming a payback period of 5-6 years and annual savings of 15% on our energy costs. The capital I invested can also be used as a tax deduction over this period.
However, the reluctance of the National Electricity Board to approve new rooftop solar projects this year has left its plans in limbo.
“The approvals from Tangedco (the electric utility which is a subsidiary of the Tamil Nadu Electricity Board) have been pending for eight months now; so my capital is blocked until the approvals come in, ”Ganesh said. “We have no alternative to Tangedco for the power supply and I don’t know if the reasons for their refusal are commercial or political. Our application was not rejected; there is simply no decision yet.
Uninterrupted power supply, depreciation and prohibitive commercial electricity tariffs seem to be the main reasons why companies in Tamil Nadu want to abandon their dependence on the state-owned utility Tangedco and install their own. own private production units. The easiest way to do this is to install a solar unit on the roof at the company’s premises but, as Ganesh learned the hard way, this is also where the electrical hierarchy established by the State is the least willing to give in.
Ambitious targets for rooftop solar
Rooftop solar units are a form of distributed power generation where homeowners, factories or businesses can install solar panels on their rooftops or on an adjacent open space to meet a portion of their electricity needs, separately. of electricity otherwise supplied to the building by the region the grid. The central government set a target for all of India of 40,000 MW of solar roofs to be installed by 2022. India’s capacity, as of December 2020, was only a fraction of that – around 6,700 MW. .
Tamil Nadu has been a pioneer in the field of renewable energies, leading the race with its industrialized peers such as Karnataka, Gujarat and Maharashtra in encouraging the first flush of solar and wind installations. However, in recent years the state has started to dampen its initial enthusiasm and lost its ranking in the ranking of annual capacity addition in renewable energy.
In addition, Tamil Nadu currently has more restrictive policies on placing rooftop solar units that interact with the public grid, aggressively reducing financial incentives for Tangedco customers who may wish to create their own generation. private.
As of December, Tamil Nadu had a total rooftop installed solar capacity of 537 MW, of which 75% is industrial, 19% commercial and 6% in the public sector, according to Gurgaon-based Renewable Energy data. Bridge to India consulting firm. While the state has taken a rapid lead in increasing capacity, recent data shows that frequent policy changes discouraging new rooftop solar installations have significantly slowed the pace of growth. (See graphic.) These political about-faces defeat the state’s goal of putting 3,600 MW of solar power on rooftops by 2023.
“Tamil Nadu lost its head (in rooftop solar power) in 2017 because net metering was not offered after 2016,” said Vinay Rustagi, Managing Director of Bridge to India. “Currently, only net metering is available for low voltage consumers (less than 112 kW) and there is no provision of grid connectivity for high voltage consumers.”
Net metering and net metering are two ways of calculating the compensation paid to private rooftop solar units that sell their excess private electricity production to the grid using a two-way meter. In the net metering system, the producer-consumer (pro-consumer) can subtract the energy he sells (in terms of units) to the grid from the number of units he buys. The difference between these two figures is invoiced according to the standard tariffs of the panel. Under the net metering agreement, the pro-sumer sells its excess energy to the grid at a standard feed-in tariff, while the energy it purchases will be billed at the slab price. Given the large difference between the feed-in tariff (mainly under Rs 2 per unit) and the per-slab tariffs, the savings for pro-consumers are much lower in net metering than in net metering.
“Tamil Nadu has an ambitious rooftop solar capacity target and the state has attractive reach and high demand from commercial and industrial consumers to install rooftop units. But progress is limited because of these unnecessary policy measures, ”said Rustagi.
The state’s reluctance to approve new rooftop solar projects, despite recent orders from the Electricity Regulatory Commission (TNERC), has hit industrial users – who pay the highest tariffs – particularly hard. If Tangedco’s electricity supply cost averages Rs 8.20 / kWh (kilowatt-hour), it must charge industrial high-voltage customers up to 11 or 12 yen per kWh to compensate for low tariffs for residences. or free electricity for agricultural users.
Despite repeated requests, the chairman of the state electricity board refused to respond to Activity area‘s queries. However, data from the Department of Energy gives some clues as to why Tangedco has been reluctant to embrace private green electricity generation.
In June, the Tamil Nadu power company had the largest backlog of unpaid contributions (18,370 crore) it owed to its major large-scale power producers, compared to the rest of the country. The state also ranks last in terms of ease of payment to producers. For a utility that is already struggling to pay its creditors, losing any business to high-value electricity customers, such as those in the commercial and industrial categories, while they switch to rooftop solar power would not do than exacerbating their own financial problems.
Confrontation with the regulator
Last month, TNERC asked Tangedco to handle all pending requests from high voltage industries for the installation of roofing systems. Tangedco, however, brought this dispute to the Madras High Court.
“Tamil Nadu is very unique in that it does not allow high voltage consumers to opt for net metering, where they can export excess electricity to the grid. If you don’t have this facility, much of the energy generated will likely be wasted, ”KR Harinarayan, founder of U-Solar Clean Energy, who works as an engineering, procurement and construction contractor with clients from solar roofs in several states. , noted. “As a result, even though Tamil Nadu has many industries and businesses with high energy needs and the capital to install rooftop units, many are reluctant to do so. Only industries that can absorb all the energy generated during the year, for example those that operate 24/7, such as spinning mills or large automotive companies, find a viable option on the roof here. .
Apart from that, the excessive delay in approvals has reduced appetite for new installations. “No high voltage approval has come from Tangedco this year due to the case they brought to TNERC,” Harinarayan said. “As a result, even when customers ask to install a roof now, we advise them to wait until the policy is clear. However, we are optimistic that this issue will be resolved soon. “
Things are starting to improve, however, after the recent regime change in the state. “With the new government in place, we hope that some of the restrictions on grid-interactive solar power will be resolved soon,” said P Ashok Kumar, president of the Tamil Nadu Solar Energy Developers Association. “This week, TNERC released draft guidelines that will allow net metering installations for rooftop residential units up to 10kW, which is a huge benefit for small-scale users. There are also concessions for commercial and industrial low voltage solar roof users, provided they pay a grid charge of 1.27 per kw / hour to Tangedco. Given these new guidelines, I think it is possible to work more with the government to find a solution for high voltage customers as well. “
The residential boom
Even as demand in commercial and industrial categories is falling, some entrepreneurs are seeing an increase in residential demand for solar roofs in Tamil Nadu, said JB Sathishkumar, owner of Kanchipuram-based Dynamic Power Systems. “After covid, now that so many people are working from home, there is a lot of demand for uninterrupted power in homes and small businesses. I have been selling household roof systems for 12 years in Tamil Nadu and have done the most business in 2020.
“Setting up grid connectivity with solar power is complicated. Customers who sold excess electricity to the grid found that they received an average of 1.8-2 per unit, depending on the lowest bids for that day across India. So it’s not useful if your grid electricity cost is 6-7 yen per unit. Instead, now most of my customers choose to include battery storage with their rooftop units, even though that makes the whole installation more expensive initially, ”Sathishkumar added. “Customers typically install units from 1 to 5 kW, depending on their energy consumption, number of devices, and so on. It can be difficult to get a bank loan to install these units, but customers who can afford the upfront cost are more likely to go this route. and not anymore.
P Suresh, a resident of the southern suburbs of Chennai, has installed a 3-kilowatt battery-powered rooftop solar unit in his bungalow, where he runs a business consultancy company from the top floor. “I thought setting up a solar unit would be more economical than just using an inverter to survive power outages,” he told BusinessLine. “I get about six units of power a day; it’s not a lot, but the lights, fans and internet in my office don’t turn off during a power outage. The advantage for me is that because it’s an asset of the business, I can amortize the cost of capital over its life.
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 confidentiality.)