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Casting shadows: Tamil Nadu’s restrictive policies hinder growth of rooftop solar

Within the second half of 2020, Okay Ganesh, a small enterprise proprietor close to Dindigul, invested near ₹5 crore to arrange a megawatt (MW)-sized rooftop photo voltaic unit at his manufacturing unit. The mission was a part of his long-term plan to shift away from state-owned energy utility and it’s ever rising tariffs for industrial prospects to a greener power supply inside his mill’s premises.

“We’re a high-tension shopper and we’re solely depending on Tangedco for energy provide,” Ganesh informed BusinessLine. “I invested within the unit assuming a 5-6 12 months payback interval and 15 per cent annual financial savings in our power prices. The capital I invested may also be used as a tax write-off over this era.”

Nonetheless, the state electrical energy board’s reluctance to approve new rooftop photo voltaic initiatives this 12 months has left his plans in limbo.

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“The approvals from Tangedco (the state energy utility that could be a subsidiary of Tamil Nadu’s electrical energy board) have been pending for eight months now; so my capital is caught so long as the approvals don’t come by way of,” Ganesh stated. “We don’t have any various to Tangedco for energy provide and I don’t know if their causes for not approving are business or political. Our utility has not been rejected; there’s simply no determination but.”

Uninterrupted energy provide, depreciation write-offs and prohibitive business tariffs for electrical energy look like the first causes that companies in Tamil Nadu wish to shift away from their dependence on state-owned energy utility Tangedco and set up their very own personal technology items. The best method to do that is to arrange a rooftop photo voltaic unit inside the enterprise premises however, like Ganesh has learnt the laborious method, it’s additionally the place the state’s established electrical energy hierarchy is least prepared to relent.

Bold targets for rooftop photo voltaic

Rooftop photo voltaic items are a type of distributed energy technology the place owners, factories or companies can arrange photo voltaic panels on their roofs or on adjoining open house to supply a portion of their electrical energy wants, separate from the electrical energy in any other case provided to the constructing from the regional grid. The central authorities has set an all-India goal of 40,000 MW of photo voltaic rooftop to be arrange by 2022. India’s capability, as of December 2020, stood at a fraction of that – roughly 6700 MW.

Tamil Nadu was an early mover within the renewables power house, main the race with industrialised friends resembling Karnataka, Gujarat and Maharashtra in incentivising the primary flush of photo voltaic and wind energy installations. Nonetheless, in the previous few years, the state has begun to drag within the reins on its early enthusiasm and has dropped rankings within the leaderboard of annual capability addition in renewables.

As well as, Tamil Nadu presently has extra restrictive insurance policies on establishing rooftop photo voltaic items that work together with the state grid, aggressively slashing monetary incentives for Tangedco’s prospects who might want to arrange their very own personal technology.

As of final December, Tamil Nadu has a complete put in photo voltaic rooftop capability of 537 MW, of which 75 per cent is industrial, 19 per cent is business and 6 per cent is within the public sector, based on knowledge from Gurgaon-based renewable power consultancy agency Bridge to India. Whereas the state constructed an early lead in including capability, current knowledge reveals that frequent coverage modifications discouraging new rooftop photo voltaic installations have considerably slowed down the tempo of development. (Refer chart.) These coverage flip-flops fly within the face of the state’s personal goal to arrange 3600 MW of rooftop photo voltaic by 2023.

 

Altering incentives

“Tamil Nadu misplaced the lead (in rooftop photo voltaic) in 2017 as a result of net metering was not supplied after 2016,” Vinay Rustagi, Managing Director, Bridge to India, stated. “Presently solely net billing is obtainable to low-tension shoppers (under 112 kW) and there’s no grid connectivity provision for high-tension shoppers.”

Internet metering and net billing are two methods to calculate compensation paid to personal rooftop photo voltaic items that promote their extra personal energy technology to the grid utilizing a bi-directional meter. Within the net metering association, the producer-consumer (pro-sumer) can can subtract the power they promote (when it comes to items) to the grid from the variety of items that they purchase. The distinction between these two figures is billed based on normal slab charges. Below the net billing association, the pro-sumer sells their extra power to the grid at an ordinary feed-in tariff whereas the power they purchase can be charged at slab charges. Given the huge distinction between the feed-in tariff (principally underneath Rs 2 a unit) and the slab charges, the financial savings for pro-sumers are far decrease underneath net billing than underneath net metering.

“Tamil Nadu has an bold rooftop photo voltaic capability goal and the state has engaging radiation and a excessive demand from business and industrial shoppers to arrange rooftop items. However progress is restricted as a result of these unhelpful coverage measures,” Rustagi stated.

Tangedco’s losses

The state’s reluctance to approve new rooftop photo voltaic initiatives, regardless of current orders from the the electrical energy regulatory fee (TNERC), has hit industrial customers – who pay the very best tariffs – notably laborious. If Tangedco’s price of energy provide per unit averages at Rs 8.20/kWh (kilowatt hour), it must cost high-tension industrial prospects as a lot as ₹11 or 12 per kWh to offset low tariffs to residences or free energy to agricultural customers.

Regardless of repeated requests, the chairman of the state’s electrical energy board has declined to answer BusinessLine’s queries. Nonetheless, knowledge from the Ministry of Energy provides some clues as to why Tangedco’s has shied away from embracing personal technology of inexperienced energy.

As of June, Tamil Nadu’s energy utility has the very best backlog of unpaid dues (₹18,370 crore) that it owes its major large-scale energy mills, in comparison with the remainder of the nation. The state additionally ranks on the backside when it comes to ease of funds to mills. For a utility already struggling to pay its collectors, shedding any enterprise from high-value bulk energy prospects, like these within the business and industrial classes, as they change to rooftop photo voltaic would solely exacerbate its personal monetary troubles.

Face-off with the regulator

Final month, the TNERC directed Tangedco to course of all pending purposes from excessive rigidity industries for establishing rooftop methods. Tangedco, nonetheless, took this dispute additional to the Madras Excessive Court docket.

“Tamil Nadu may be very distinctive in not permitting high-tension shoppers the choice of net metering, the place they will export surplus energy to the grid. In the event you don’t have this facility, lots of the power generated is more likely to go waste,” KR Harinarayan, Founder, U-Photo voltaic Clear Power, which works as an engineering, procurement and development contractor with photo voltaic rooftop prospects throughout a number of states, stated. “Because of this, although Tamil Nadu has a lot of industries and corporations with excessive energy necessities and the capital wanted to arrange rooftop items, many are reluctant to take action. Solely industries that may take up all the facility generated by way of the 12 months, eg these which function 24*7 like spinning mills or massive auto firms, discover rooftop a viable possibility right here.”

Except for this, the inordinate delay in approvals has diminished the urge for food for brand new installations. “No high-tension approvals approvals have come from Tangedco this 12 months as a result of case they’ve introduced earlier than TNERC,” Harinarayan stated. “Because of this, even when prospects come to make use of asking to arrange rooftop now, we’re advising them to attend until there’s some readability in coverage. Nonetheless, we’re optimistic that this problem can be sorted out quickly.”

Issues are starting to search for although, after the current regime change within the state. “With the brand new authorities in place, we hope that among the restrictions on grid-interactive photo voltaic power can be resolved quickly,” P Ashok Kumar, President, Tamil Nadu Photo voltaic Power Builders Affiliation, stated. “This week, the TNERC has printed draft tips that can enable net metering facility for residential rooftop items as much as 10 kW, which is a giant profit for small-scale customers. There are additionally some concessions for low-tension business and industrial customers with photo voltaic rooftop so long as they pay a ₹1.27 per kw/hour networking cost to Tangedco. Given these new tips, I consider there’s scope to work additional with the federal government for locating some decision for high-tension prospects as nicely.”

Increase time for residences

Whilst demand within the business and industrial classes falling, some contractors are seeing an uptick in residential demand for photo voltaic rooftop in Tamil Nadu, JB Sathishkumar, proprietor of Kanchipuram-based Dynamic Energy Techniques stated. “Publish-covid, now that so many individuals are working from residence, there’s lots of demand for uninterrupted energy provide at residences and small enterprise. I’ve been promoting rooftop methods for households for 12 years in Tamil Nadu and I did probably the most enterprise in 2020.

“Establishing grid connectivity with photo voltaic is sophisticated. Prospects who used to promote extra energy to the grid discovered that they obtain common of ₹1.8 to ₹2 a unit, relying on the bottom bids for that day pan-India. In order that’s not useful in case your price of energy from the grid is ₹6-7 a unit. As a substitute now, most of my prospects are opting to incorporate battery storage with their rooftop items, although this makes the entire set-up costlier initially,” Sathishkumar added. “Prospects usually set up 1-5 kW items, primarily based on their power utilization, the variety of home equipment and so on, It may be tough to get a financial institution mortgage to arrange these items, however prospects who can afford the upfront price are taking this route increasingly now.”

P Suresh, a resident of a south Chennai suburb, put in a 3 kilowatt rooftop photo voltaic unit backed with batteries at his bungalow, the place he runs a enterprise consultancy agency from the highest ground. “I believed establishing a photo voltaic unit could be extra economical than simply utilizing an inverter to final by way of the facility cuts,” he informed BusinessLine. “I get about six items of energy a day; it’s not loads however the lights, followers and web at my workplace don’t go off throughout an influence minimize. The profit for me is that as a result of it’s an asset of the corporate, I can write off the capital price over its lifetime.”

Tanya Thomas is an unbiased journalist. The reporting for this story was supported by a grant from the Earth Journalism Community.

(Some names have been modified to guard privateness.)

https://www.thehindubusinessline.com/news/casting-shadows-tamil-nadus-restrictive-policies-hinder-growth-of-rooftop-solar/article36101610.ece | Casting shadows: Tamil Nadu’s restrictive insurance policies hinder development of rooftop photo voltaic

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