India

India

Financial difficulties for Tamil Nadu lead to tariff freeze

Such is the poor financial state of the Tamil Nadu Electricity Board (TNEB) that it will continue to buy wind power for INR 2.25/kWh despite having agreed a tariff increase to INR 2.70/kWh. "TNEB will pay the difference in future when the board's financial position is improved," says the utility. The southern Indian state has 780 MW of wind power on-line. Indowind Energy's R. Balajee interprets the decision as a negative shift in the state's wind policy. Karnataka and Rajasthan wind tariffs, he says, are INR 3.01/kWh and 3.16/kWh, respectively, with annual 5% increases. At the same time as freezing the tariff, TNEB is also planning to increase its 2% charges for wheeling wind power on transmission lines and for banking wind power for later use in times of power cuts. The banking period will also be drastically shortened from 12 months to two, with unused electricity being ceded to the utility. "It is known that more than 60% generation in Tamil Nadu is between May and September and the banking of two months during this peak period results in heavy losses if the generation is not consumed," says Balajee. "Overall, the policy promises one thing and that is driving away potential investors from Tamil Nadu to other states where the policies are investor-friendly," he added. An indication of TNEB's change of heart on wind power came earlier this year in a response to the Confederation of Indian Industry which was asking electricity boards to promote wind energy as a solution to power shortages. "It is well known that power generation through wind is not a dependable source and, therefore, no additional load can be met from this capacity. It is not financially prudent for the TNEB to buy wind energy. Already the TNEB is losing a considerable amount of money on account of purchase from the wind mills at a substantially high cost," stated the board.

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