Two new solar power projects that would utilise solar photovoltaic technology have been proposed in the southern districts with Central financial assistance. Identification of a suitable site and technical viability studies for the projects are presently underway, Tamil Nadu Energy Development Agency (TEDA) Deputy General Manager, Madurai Region, S.E.S. Syed Ahamed, told The Hindu here on Thursday.

The Madurai Region covers 16 districts of south and Central Tamil Nadu. While one project will be a 10 MW power plant, the other one would be a 1 MW plant, he said. The proposals would be submitted and approval is expected from the Union Ministry of New and Renewable Energy (MNRE) by March 2010.

Financial assistance through loans would come from the Indian Renewable Energy Development Agency (IREDA), he said, The IREDA is a public financial institution operating as a non-banking finance company for renewable energy-related projects and comes under administrative control of MNRE.

According to Mr. Syed Ahamed, the two projects were eligible to avail loan up to 80 per cent of the total project cost, on which no cap has been imposed as per MNRE norms. The loan is repayable in five years.

Either an incentive of Rs.13 per unit or a tax holiday for a considerable duration could be availed by the two project beneficiaries. Solar power could be generated for around 300 days a year. The investment required for generating 1 MW through solar power is around Rs.18 crore including land acquisition cost.

Southern districts have many of the sites identified as suitable for solar power generation in Tamil Nadu. Ramanathapuram, Sivaganga, Kanyakumari, Tirunelveli and Tuticorin have immense potential, he said. These two projects are being taken up by private sector players who would supply power to the Tamil Nadu Electricity Board's (TNEB) power grid.

The Tamil Nadu Electricity Regulatory Commission (TNERC) has fixed a provisional tariff of Rs. 4.50 per unit as purchase rate for procurement of power by the distribution licensee from the solar photovoltaic and solar thermal power generation Plants, according to a top TNERC official.