TNERC Approves SPO in Tamil Nadu

In a recent development in TN, the state electricity regulatory commission, on March 7^th 2013, released an order addressing the issues related to the Solar Policy 2012. The commission has identified that there is a deficit of about 4000 MW of peak demand and hence any addition of power would be vital to tackle the power shortage of the TN grid. With an installed capacity of only 7 MW from Solar Power plants in TN, there is an ardent need to encourage investors and developers to install more Solar Plants in the state to ease the burden on TANGEDCO. In lieu of the same, the commission has devised a mechanism to ensure that the Solar Purchase Obligation (SPO), as prescribed in the Solar Policy is implemented in a more efficient manner.

Solar Purchase Obligation

The commission has declared that the SPO will be 3% starting from Jan 2013 to December 2013 and 6% from Jan 2014 as envisaged in the Solar Policy 2012. The following entities will come under the obligation.

1. HT Consumers (HT Tariff I to V)
   1. Special Economic Zones
   2. Industrial connections with guaranteed power supply
   3. IT parks, Telecom Towers
   4. All colleges & Residential schools
   5. Building with a built up area of 20,000 sq. m or more
2. LT Commercial (LT Tariff V)

LT Industrial consumers, Domestic Consumers, Agricultural Consumers, power looms, huts, cottage and tiny industries are exempted from the obligation.

Modes of Compliance

The commission has defined the following modes through which the obligated entities can fulfil their obligation.

1. The Obligated Entity may set up their own Captive Generating Solar Power Plant equivalent to or more than their obligation.
2. The Obligated Entity may buy power from third party generators of Solar Power projects in TN equivalent to or more than their obligation.
3. The Obligated Entity may buy power from TANGEDCO at Solar Power tariff.
4. The Obligated Entity may buy equivalent number of RECs from the market to comply with their obligation.

The commission has also clarified that if the obligated entity is an open access consumer, the SPO will be inclusive of the Solar Obligation as defined in the RPO regulation.

Enforcement Mechanism

The entire process of administering the SPO will be the responsibility of TANGEDCO. A penalty equivalent to the Forbearance Price of Solar REC will be levied on every obligated entity who fails to comply with the obligation. The penalty will be payable to TANGEDCO, which will in turn be used to purchase Solar RECs from the Market. This particular move will be welcomed by the REC Market as it will lead to enhanced buyer side participation. The commission has also clearly defined that the SPO will be on the total consumption of non solar power irrespective of the source of generation. The compliance period for consumers purchasing from TANGEDCO would be specific to the billing cycle of their service connection. For other consumers, the compliance period would be fixed for the calendar year. In other words, except for consumers buying Solar Power from TANGEDCO, their total consumption from Jan 1^st 2013 to Dec 31^st 2013 will be under an obligation of 3% and 6% henceforth.

Rooftop Units

For domestic rooftop units, the commission has ordered TANGEDCO to install suitable meters for Net Metering concept at the cost of consumers/developers. The TANGEDCO has also been ordered to address the following issues.

• Standards & Meter Locations
• Tariff for Excess generation
• Period of Power Credit
• Any other related issues.

The commission has also directed TANGEDCO to evolve with a procedure for Accreditation, Issuance & Trading of RECs for Solar Generators established in TN.

The order can be found here