Investments of Rs. 1,240 crore are likely

Southern districts will take the lion’s share of new solar power plants to be set up under the State’s Solar Energy Policy.

Of the plants approved for 209 megawatt (MW), the south will have 155 MW, of which Ramanathapuram district alone accounts for 97 MW, Tuticorin 33, Sivaganga 17 and Virudhunagar 8.

Capacities of the proposed plants vary from one MW to 10 MW to 23 MW to 60 MW.

In monetary terms, this development means that these districts are likely to see investments to the tune of Rs. 1,240 crore, going by the benchmark capital cost of Rs. eight crore per MW, as set by the Central Electricity Regulatory Commission (CERC).

To be established by private firms, the plants have to be commissioned in 10 months, according to one of the conditions laid down by the Tamil Nadu Generation and Distribution Corporation (Tangedco), which has chosen, as of now, 30 firms.

Even though the selection was completed nearly two months ago, the Corporation did not issue Letters of Intent (LOI) in view of a petition in the High Court against the tender.

As the petition has since been withdrawn, the Tangedco, about 10 days ago, gave away the LOIs.

Of the plants for the remaining 54 MW, central districts – Karur, Tiruchi and Ariyalur – account for 44 MW; northern districts – Tiruvannamalai, Villupuram and Vellore – nine MW and Tirupur in the western region will have one MW.

The price at which the Corporation will buy solar power from the proposed plants will, in the beginning, be Rs. 6.48 per unit. The initial price will be in force till March 31, 2014. From the financial year of 2014-2015, there will be a five per cent increase in the price for 10 years, after which there will be no rise for another 10 years.

As per the policy, the Corporation is the agency to administer solar power obligations imposed on certain categories of consumers such as high tension consumers.

This is why it has decided to purchase energy generated from the proposed plants through long-term agreements.

Reasons

Among the important reasons for investors preferring the southern districts are the prevalence of high solar radiance levels and availability of land at cheaper rates. The authorities’ assurance to investors to provide adequate transmission infrastructure is another key factor, says an executive of a firm, which is setting up a plant in Ramanathapuram district.

In respect of land acquisition, representatives of some of the chosen firms say they do not find it an issue as they have not encountered hurdles in getting land. [In the given instance of the Tangedco’s tender, it is for the project developers to acquire land].

As regards funding their projects, the companies will raise resources on their own or go in for loans.

An official of the Tangedco says that apart from 30 companies, two more have been provisionally selected for a total of 51 MW.

As these companies are yet to finalise their locations, they have not yet been issued LOI.

It is a matter of time that the companies will come back to the Tangedco.