Solar Lowers TANGEDCO’s Pooled Cost of Power Purchase

The Tamil Nadu Electricity Regulatory Commission (TNERC) has fixed the pooled cost of power purchases for Tamil Nadu Generation and Distribution Corporation (TANGEDCO) at ₹3.70 (~$0.056)/kWh for the financial year (FY) 2017-18. The cost applies to all purchases made from April 1, 2017.

In a letter addressing the announcement, TNERC clarified that the pooled cost of power is ₹3.70 (~$0.056)/kWh or 75 percent of the preferential tariff fixed by the commission for that category or sub-category of NCES generators, whichever is less. The preferential tariff is the tariff of choice for state PPAs and can be much lower than the generic tariff.

For FY 2016-17, TNERC had set ₹3.96 (~$0.060)/kWh or 75 percent of the preferential tariff fixed by the commission for that category as the pooled cost of power purchases payable by TANGEDCO. The current cost is ₹0.26 (~$0.004)/kWh, about 7 percent less than in the previous year.

The pooled cost of power payable by TANGEDCO has fluctuated over the past three fiscal years. In FY 2015-16 it was ₹3.35 (~$0.051)/kWh, rising to ₹3.96 (~$0.060)/kWh in FY 2016-17, then falling to ₹3.70 (~$0.056)/kWh this fiscal year.

When asked about the rise and fall of the pooled power cost, a TNERC official said, “The average pooled power cost depends on the sources of power purchased (high cost versus low cost) and demand. If the distribution company (DISCOM) purchases more low-cost power over a period of time, then the pooled power cost for the next year will go down. The commission analyzes real-time data to arrive at the pooled power purchase cost.”

“As has been happening in the past two years, the DISCOM is buying more of low-cost power (from solar wind farms and other sources) and entering into long-term power purchase agreements (PPAs), thereby reducing cost and at the same time demand has not increased much. In such a scenario, it’s easy for them to purchase low-cost power as there is no immediate requirement forcing them to buy high-cost power to supply an increasing number of customers,” added the TNERC official.

TANGEDCO recently signed PPAs for 1,500 MW of solar projects at ₹3.47 (~$0.0537)/kWh, contributing to the lower pooled cost of power purchases. Tamil Nadu is expected to auction solar projects with ₹3 (~$0.0457)/kWh as the benchmark tariff in the near future.

Image credit: Flickr