The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has proposed adopting a revised accounting methodology to cut back on tariffs for the existing net-metering program in the state. TANGEDCO has cited various reasons for the cut, including recent record low tariffs and losses incurred in wheeling and banking of wind energy.
The Government of India has set an installation target of 3,500 MW of solar rooftop for Tamil Nadu by 2022. However, TANGEDCO tenders have not received a good response and the agency wants to increase rooftop installations to make up for the RPO shortfall in the state. So far, TANGEDCO has been able to promote only 91 MW under its rooftop program, which includes 75 MW under parallel operation without net-metering to high tension (HT) consumers, and 16 MW with net-metering to eligible low tension (LT) consumers.
The most important aspect of TANGEDCO’s proposal is to reset the net-metering tariff by calculating a rate of 50 percent of the lowest solar tender during the previous financial year, or set the rate of 50 percent of the solar preferential tariff issued by the Tamil Nadu Electricity Regulatory Commission (TNERC) corresponding to the financial year, whichever is less.
The current net-metering rates for domestic consumers are: Rs 6.63 (~$0.103)/unit (LT) and Rs 6.91 (~$0.107)/unit (HT). For commercial customers, the rates are: Rs 7.01 (~$0.108)/unit (LT) and Rs 7.23 (~$0.112)/unit (HT).
With the new proposal, considering the previous year’s TNERC benchmark of Rs. 5.10 (~$0.079)/kWh (without AD), the proposed net-metering tariff will be reduced to Rs. 2.55 (~$0.039)/kWh. The lowest tariff quoted last year in Tamil Nadu was Rs.4.40 (~$0.068)/kWh and 50 percent of that comes to Rs.2.20 (~$0.034)/kWh. This will be a drastic reduction from current tariff levels.
Highlights of the proposal:
- Existing five categories of eligible LT consumers will be covered under the proposed mechanism.
- The bi-directional meter (net meter) will be provided to measure the total grid consumption (import) from the grid and the excess solar generation fed into the grid after self-consumption (export).
- The value of grid consumption (import) will be calculated at the appropriate tariff. The value of excess solar generation fed into the grid after self-consumption (export) as recorded in the net meter will be calculated by TANGEDCO at the rate of 50 percent of the least of the solar tenders’ rate (lowest tariff quoted in a utility scale solar tender) during the latest previous financial year or 50 percent of the solar preferential tariff rate issued by TNERC corresponding to the financial year, whichever is less.
- The bill settlement period will be 12 months: April to March of the financial year. No interest can be claimed by the consumer for the amount carried over to the next billing cycle until the end of the settlement period and paid, if any, at the end of the financial year.
- The maximum rooftop solar capacity will be 50 percent of the contracted demand. Further, if the solar capacity is added beyond 50 percent of the contracted demand of LT consumers, the net billing will be only up to 50 percent of the contracted demand of the LT consumers.
- There will be no ceiling on energy exported to the grid.
The TNERC will decide to either accept the proposed changes or direct the utility to move forward according to the existing regulations.
“TANGEDCO views rooftop solar as being integral to meet its renewable purchase obligation as well as cut operational costs. Rooftop solar will lead to distributed generation and ensure savings when it comes to developing the transmission network,” stated a TANGEDCO official.
It is unclear how drastically reducing the net-metering rates will spur rooftop installations in the state.
Raj is a recognized thought leader in clean energy markets where his work has influenced policies worldwide. He has a deep understanding of regulatory policy and clean energy markets and his market and opinion pieces are regularly published on both MercomIndia.com and other leading publications globally. Raj is also a regular speaker and presenter on clean energy policy and finance topics at conferences worldwide. Raj attended the KLE College of Science in Bangalore, India for physics and chemistry, and holds a Bachelor of Science Degree in Hotel and Institutional Management from Johnson and Wales University, Rhode Island. More articles from Raj Prabhu.