Tamil Nadu Solar – Tangedco Issues LOI to prospective developers

After a lot of suspense, Tangedco has issued Letter of Intent(LoI) to several bidders who have expressed their interest in setting up solar PV projects in Tamil Nadu under the Tamil Nadu state solar policy. While the exact number of LoI details are not yet available to us, it is estimated that LoI has been given to bidders for more than 200 MW as reported in the media in January 2013. It may be recalled that the target allocation was 1000 MW, but due to the relatively low tariff of Rs. 6.48/kWh and concerns about payment security led to lukewarm response to the tender. This tariff is close to the Andhra Pradesh tariff of Rs. 6.49/kWh but unlike the Andhra Pradesh tariff, the Tamil Nadu tariff provides a 5% annual escalation till the 10th year.
Next steps
As per the tender guidelines, the LoI holder now has 30 days time to complete the load flow study. Once the load flow study is submitted, Tangedco will evaluate the load flow study and sign Power Purchase Agreements(PPA) in another 30 days time. The developers then get another 240 days from the date of signing the PPA to commission their projects(click here for the timeline). If this schedule is adhered to, the LoI holder gets another 10 months to commission their project(March 1, 2014).
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6 thoughts on “Tamil Nadu Solar – Tangedco Issues LOI to prospective developers”

  1. Vijaya Raghavan Sampathkumar

    Hi sir…
    I have gone through the tender specifications document issued by TANGEDCO and in the same it has been mentioned that TANGEDCO will conduct the load flow study for transmission feasibility as per the price predetermined based on the capacity of the solar PV plant. But here it is mentioned that LoI holder must complete the load flow study. So does it mean that transmission feasibility can be conducted by any third party consultants or its mandatory that feasibility must be checked with TANGEDCO only. can you please clarify on this aspect?

  2. Dear Sir,
    I would like to know whether TANGEDCO has taken out a list of all the companies to whom they have issued LOI, as per my knowledge there are 29 Companies and a total capacity of 226MW, if you have such a list please if you could share it with me at amish.jain82@gmail.com

  3. So, finally we have managed to get scape goats for about 200 MW only as against the target of 1000 MW. We are going to see that even with the Rs.6.49 per unit, which ultimately will reach Rs.10.60 per Unit in 10 years with the 5% escalation clause, the investors are going to burn their fingers.
    Neither the consumers are going to be happy. Though they are not going to bear this extraordinary price, will ultimately has to shoulder this burden in some way. After all some one has to pay for the difference in the price between that paid by the consumer and the price paid to the solar power producers. If it is borne by the State, it will be reflected in the form of additional Tax or foregone development expense. If it is passed on to the industries, the product costs are going to be higher and the consumers of those products are going to pay that higher price.
    In any case, if we bring in an inefficient, costly and unwanted ( yes, solar power is unwanted for a grid with peak load falling between 6.00 PM to 11.00 PM !) solution to a problem, the solution will be a problem by itself !
    People will know about it when the ongoing power plants are commissioned and the day time demand shortage will be fully met by them ! At that time there will be pressure for the Thermal / Nuclear power plants to be operated at lower capacities in order to utilize the Solar capacities in day time. This is what happens in the case of Wind mills.
    The pity is that these wind mills and solar are so erratic that the DISCOM companies are breaking their heads to keep the supply and load shedding plan smooth. The consumer ultimately blames the DISCOM as if it is their fault !
    God save Indians from this Green Lobbies !

    1. Dear Sir,
      First of all, I would like to point out the fact that even though wind power is only seasonal, wind power helped reduce the load shedding from about 4 hours to less than 10 minutes last month(http://www.thehindu.com/todays-paper/tp-national/tp-tamilnadu/wind-energy-production-up-load-shedding-down/article4813057.ece).
      Second, LOIs have been issued for about 700 MW. Some of it might not materialize, but still it is far above the 200 MW mark you mentioned. I would also request you to elaborate on your point about investors burning their fingers and why they are scapegoats. Why would companies like Welspun willingly burn their fingers? Can you share some financials to support your argument?
      Third, most of the industries are already using huge amounts of diesel for power to continue their operations, and diesel power is much more expensive than solar. Even if a part of diesel consumption is offset, the cost to those customers will go down. In fact, many small and medium size companies have shut shop in the coimbatore region, while many bigger companies have shelved their investments plans for the state due to the power deficit. This in turn leads to lost tax revenues to the government. So, power deficit is a bigger problem than costlier power.
      Fourth, “solar is unwanted” is a highly subjective argument. In a country were power deficits are huge, any additional power to the grid will provide relief. Of course, there will be challenges in grid-management as happens in wind during peak times. But those are not unsolvable.
      Fifth, we are not going to see the day when time demand shortage is completely met by conventional power plants in the near future. (http://www.thehindu.com/news/national/tn-ropes-in-private-firms-to-wipe-out-power-deficit/article4898814.ece). When the day comes, evacuation infrastructure and grid-management becomes important, but again with proper planning, this can be managed.
      Sixth, Solar power is not erratic. It is fairly predictable, but the disadvantage is that it is not available throughout the day. Since it is predictable, load management is relatively easier. Moreover, with the UI penalty charges in place, it is the responsibility of the wind/solar power producer to accurately predict the energy generation within a range, and intimate the SLDC.
      Indians need to be first saved from huge power cuts of upto 16 hours. 400 million people who have never seen electricity in their lives and who have to suffer kerosene smog, also need to be first saved. Once every Indian has access to electricity and the day when electricity deficit is completely wiped out, we can pray to God to save Indians from Green Lobbies. Till then, we need Solar and Wind and every source of energy.

  4. Hi Madhavan,
    Can you please share with me the list of developers that are issued the LOI by the government. Also, I wanted to understand if the PPAs are tradeable in Tamil Nadu.

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