The Tamil Nadu Electricity Regulatory Commission (TNERC) has fixed ₹3.97 (~$0.0549)/kWh as the pooled cost of power purchase that the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) will pay to the generators of non-conventional energy sources (NCES).

The cost is subject to a maximum of 75 percent of the preferential tariff that has been fixed by the TNERC for the category of NCES generators.

This implies that TANGEDCO has to pay either ₹3.97 (~$0.0549)/kWh or 75 percent of the preferential tariff (whichever is less) if it procures from renewable energy generators. This order has been in effect from April 1, 2018.

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

The new pooled cost of power purchase for TANGEDCO is ₹0.27 (~$0.0037)/kWh more than the pooled cost of power purchase fixed for the previous financial year.

When contacted about the spike in the pooled power purchase cost, a TNERC official said, “The pooled power purchase cost depends on all power drawn from all sources. This time around the number of PPAs for cheaper power sources like solar and wind were not signed as much as compared to the previous fiscal. Coal drawn power is not cheap. The cost of coal plants is increasing, and the amount of power drawn from them was more compared to other sources leading to a spike in the pooled power purchase cost.”

Last fiscal when the pooled power purchase cost had gone down the same TNERC official had said, “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.”

More wind and solar projects are the need of the hour in Tamil Nadu and the state has huge potential for both.