Rising resentment of government -- Tamil Nadu wind grinds to halt

The normally boyant wind industry in the state of Tamil Nadu in southern Indian has hit hard times. The wind market has been forced to a standstill while the state reconsiders its renewables policy and plant owners are not being paid for output. Meanwhile, Tamil Nadu now has a power generating surplus and wind industry members are accusing the state of backing out of its renewables commitments. The national government says that it is confident new state policy will appear within a month.

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The state of Tamil Nadu in southern Indian, hitherto a shining star of wind power development, is not the favourite flavour of the industry at the moment. Not only has the wind market effectively been brought to a standstill while the state reconsiders its renewables policy, but wind plant owners are also not being paid for output. The Tamil Nadu Electricity Board (TNEB), it is believed, owes over US$8.5 million to around 150 wind plant operators.

The Wind Power Developers Association sued TNEB in February for recovery of dues owed to its members over the previous six months. A second court hearing was scheduled late last month. "If TNEB cannot afford to pay its dues, then why does it not allow third party sales?" complains one bitter wind plant operator. "You cannot have your cake and eat it too."

Resentment in the wind sector is growing. With 780 MW of wind power on-line, Tamil Nadu now has a power generating surplus. Wind industry members are accusing the state of backing out of its renewables commitments. Recently, the government approved a $1063 million conventional power project, including a naphtha-based (coal tar derivative) plant. Says one industry member: "The government cannot back out of a state policy as though it never happened."

Many large developers, still paying off their wind plant loans, are coming under pressure from bankers. The future looks none too bright either. The Indian Renewable Energy Development Agency (IREDA) is reportedly considering calling a halt to its sanctioning of new renewable energy projects in Tamil Nadu until the state announces a new policy, including a wind tariff. "Wind power growth in the state is bound to get affected without a long term policy," comments Indowind Energy director K.V. Balakrishnan.

Some hope

Tamil Nadu is promising a new policy. At national government level the Ministry of Non Conventional Energy Sources (MNES) says it is confident the state policy will appear within a month and that it will follow MNES guidelines for promotion of renewable energy. The industry remains sceptical. President of the Indian Association of Wind Turbine Manufacturers, Sarvesh Kumar, says he doubts the policy will materialise before June. The association expects to hold talks with TNEB only after the state elections in May.

The trouble began at the end of last year when Tamil Nadu failed to make the scheduled annual price increase for renewables. Instead it retreated from the tariff of INR 2.70/kWh, dropping the rate back to its 1995 level of INR 2.25/kWh ($0.048/kWh), with a promised 5% annual increase. This interim tariff policy, however, expired on March 31. "We can't object to a policy that doesn't exist; nobody listens and nobody is paying any attention to what the industry is saying. This confusion has affected business in the pipeline," says a frustrated Kumar.

At MNES officials are confident that Tamil Nadu will fix the tariff at INR 3.03/kWh. Meanwhile charges for the reactive power not delivered by wind turbines but needed by the grid has been increased from INR 0.30/kWh to INR 1.0/kWh and banking of excess power production with the utility is being restricted to a month ahead only, further increasing the price of clean energy.

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