It has been over a week since the Tamil Nadu government unveiled its solar policy for 2019. As per the new provisions, the state will aim to install 9,000 megawatts (MW) of solar capacity by 2023, with 40 percent of these installations coming from rooftop solar panels.
While the policy could mean that Tamil Nadu will make a giant leap towards going green, several questions continue to remain on just how the state will implement the policy.
For instance, the government’s plan to install a total of 9,000 MW of solar power in five years sounds great on paper. But there’s one big problem: the decision to get more homes and offices to build solar panels on their rooftops. That’s because if you own a decently sized factory, you probably fall into the “high-tension” category, and don’t have your plant covered under the solar policy.
“The policy doesn’t include ‘high tension’ consumers, which means scaling up of small and medium enterprises would be challenging,” said Saswat Das, managing director, Sunmeister. “So, you would only focus on smaller individuals, who would either fall under the ‘subsidy’ category or end up being high-income groups who will then build solar plants of their own.”
Added to this dichotomy is the government’s apparent inability to implement uniform net-metering for rooftop solar panels already in existence. Both factors coupled result in Tamil Nadu losing out on a great deal of potential installed capacity.
“We did a quick back-of-the-envelope calculation. If we tweak the policy and install solar rooftops across Chennai alone, we can have 1,500 MW of solar coming in from rooftops in the city,” said Ramesh Kymal, managing director, Siemens Gamesa India.
But if losing out on potential is one problem, the fact that the state’s Micro, Small and Medium Enterprises (MSME) sector probably doesn’t get to benefit as much from the policy, on account of the government’s step-motherly treatment of high-tension consumers, is more worrying.
“The MSME sector is more competitive outside Tamil Nadu and internationally, only because it is able to get power at a reasonable price through renewable energy,” added Kymal. “So, it is important that open access is part of this policy.”
At present, Tamil Nadu has 2,200 MW in installed solar capacity. Adding 6,800 MW in five years means 1,360 MW per year in new capacity. Experts maintain that getting to that will not be a problem.
“We could have aimed higher,” said Kymal. The policy also allows for single-window approvals for manufacturing projects involving solar equipment and calls for exempting the consumer category from electricity tax for two years.
What will continue to be a bugbear for solar producers, however, is the Tamil Nadu government’s continued preference of reverse-bidding, to decide solar tariffs. At present, the process ensures that buyers end up with extremely low solar tariffs — a factor that could prove to be unviable for sellers in the long run.
“Reverse auctioneering has driven tariffs down to such a low level that it is no longer viable,” said Ranganath NK, managing director, Grundfos India. “So, there is going to be a situation where a provider decides to cut corners if they are continuing to quote prices at the tariff in question.”
There is, however, a way out — should the government choose to implement it by tweaking the policy. “One of the suggestions we were discussing a few days ago, is to ignore the lowest quote and the highest quote,” said Ranganath. “Take the average quote instead, and that should be the price-discovery mechanism — to make it sustainable for anybody investing.”
With elections approaching, the state government is choosing to take the project-and-scheme route towards boosting solar capacity. This includes investing Rs 1,500 crore in floating solar projects and providing 2,000 solar pump sets to the state’s farmers.So, while Tamil Nadu looks more than certain to hit that 9,000-MW target by 2023, how easily can it get there will continue to remain a question that needs answering.