Tamil Nadu’s Solar Energy Policy can go a long way in addressing the supply-demand mismatch The State’s solar initiative can draw on the strengths of its robust wind power programme

Is the sun the answer to Tamil Nadu’s power crisis? With the unveiling of the Solar Energy Policy last week, Tamil Nadu joins the long list of States trying to find a way of harnessing this source of renewable energy for mass utilisation.

The gap is more than what a recharged policy can help fill. Until recently, most parts of the State had over 14 hours of load shedding. However, as an indication of the State government’s resolve to address the demand-supply mismatch, the new policy has aroused enough interest among domestic and industrial consumers.

This is the first time in recent years that the State government has prepared a policy specifically concerning one form of renewable energy. All along, the policy framework on the renewable energy sector was generally based on directions of the Tamil Nadu Electricity Regulatory Commission with the government playing a limited role. Needless to say, the document draws some strength from the Jawaharlal Nehru National Solar Energy Mission.

By setting the ambitious target of 3,000 megawatt (MW) solar power generation by 2015, the Tamil Nadu policy makes itself distinct in certain respects from policies of other States such as Gujarat and Rajasthan, the leaders in tapping solar energy.

First off, the incentive. Domestic consumers, who opt for rooftop solar power installations, will be eligible to receive generation-based incentive (GBI), a move that is bound to instill greater public interest. Even the Rajasthan Solar Energy Policy of April 2011 refers to GBI but is applicable only to distribution companies of the State.

Next, the order. Sections of high-end consumers including special economic zones and information technology parks have been directed to purchase a quantum of power from solar sources.

Initially, these power consumers have to procure three per cent of their consumption and this will remain in force till December 2013, after which the quantum goes up to six per cent.

The prescriptions are much higher in Tamil Nadu than in Gujarat, which has been marketing itself as a trendsetter in the field. As per the Gujarat Electricity Regulatory Commission’s order of January 2012 on tariff determination for solar energy procurement, the prescribed quantum for the current year is 0.5 per cent.

Unlike in the case of the Andhra Pradesh Solar Power Policy [announced in September] that clearly lays the responsibility on private developers of solar power plant projects to acquire land, the Policy of Tamil Nadu talks of land allotment in industrial estates at a reasonable cost.

Notwithstanding these impressive features, the policy has evoked some doubts as to whether it can become a hit among domestic consumers, crucial for the policy to succeed.

A section of solar products manufacturers is of the view that the incentive is not attractive enough for domestic consumers if the five-per-cent Value Added Tax were to be factored in to the cost of a one-kilowatt (kW) solar photovoltaic plant. According to an estimate, the tax amount would be around Rs. 12,500 whereas the amount of incentive allowed for six years under the GBI scheme would come to Rs. 10,500. Manufacturers are asking the government not to levy VAT on these solar sets. The AP Solar Energy Policy has already set an example by providing for VAT refund on inputs for all solar power projects.

K.E. Raghunathan, a long-standing manufacturer, says the government would do well to arrange loans at concessional rate of interest, apart from providing a liberal subsidy on the cost of the sets. The present scheme, administered by the Union government, is not adequate as it envisages subsidy of Rs. 81 per watt or 30 per cent, whichever is lower.

Amazingly, wind power, another source of renewable energy, has grown in leaps and bounds in Tamil Nadu without the authorities having to undertake high-profile and aggressive marketing. More than 25 years since the launch of the nationwide programme to tap wind energy, Tamil Nadu still remains the leader, accounting for about 40 per cent [6,970 MW] of the country’s installed capacity of wind mills. It is a tribute to the inherent strengths of the State and the administration as well as the silent and constructive work culture of the people of the State. At a time when big plans are drawn up to promote solar power, these qualities may stand in good stead again.

(With inputs from M. Soundariya Preetha in Coimbatore.)

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