For long the pricing of Solar Power was regarded as the greatest inhibitor to its growth. In the present circumstances, it has assumed extreme significance because of three factors. First is the imperative of having clean energy source so that we burn less coal. Second, our country has environment concerns and has made international commitments whereby we are bound to reduce our emission levels. Third, discoms have to compulsorily buy solar power from gencos, so solar power tariff becomes a very important public interest issue.
In our cover story of this issue we bring to you the details of the Solar Power Scam in the state of Tamil Nadu. This has two important dimensions. The first dimension pertains to the method for awarding contracts. All state governments across India are awarding solar power contracts through open tenders & e-auctions but Tamil Nadu has done so through nomination basis. The huge cost of this scam will be borne by the Tamil Nadu Generation & Distribution Corporation, which itself is steeped in accumulated losses of Rs 54,000 crore, and the consumers in the Tamil Nadu state.
The second dimension relates to tariff and here the role of the regulator, TERC is highly suspect. The tariff rate was fixed at Rs 7.01 per unit for 25-year period. This tariff was applicable for power capacities commissioned within a year of the Order, which was September 11, 2015. This is known as ‘control period’ and reference rates are revised as the cost of solar plants is going down. All SERCs do this. But in Tamil Nadu, the TERC extended the control period by six months through a majority 2:1 order without revising the tariff. This was done on April 1, 2015.
The Minority Order by TERC Member S Nagalswamy raises key issues, which surely will not escape the attention of audit agencies of the government. Neither should have Tangedco let it go unchallenged.
In his Order, Mr Nagalsamy has stated that the cost of solar project has come down to Rs 5.86 crore per MW and as a result, the reference tariff should also come down to Rs 5.87 per unit. He has said that the state has received applications for setting up solar power projects of 5,366 MW capacity and if extra tariff of Rs 1.14 per unit (difference between Rs 7.01 & 5.87) is paid for 25 years, this would mean a loss of Rs 23,000 crore to Tangedco.
