CHENNAI: Tangedco has re-jigged power purchase agreement with private thermal plants as the power tariff has been falling each year. In 2014, Tangedco signed a PPA for 25 years with Adani’s solar power company at 7.01 per unit. Since then the tariff has fallen to 3 per unit.
As the renewable power tariff has been falling, Tangedco could not evacuate power generated by private thermal units as the tariff is higher. Following this, thermal companies as well as solar companies have given discounts to Tangedco from 1 to 1.5 a unit. Still the tariff is high and only if the demand is very high, power from these companies will be evacuated.
“We have received discounts from private thermal units like IL&FS and others so that the tariff will be with other power sources. They have agreed to provide power at around 4 per unit while their original tariff was above 5 per unit for 5 years,” said a senior Tangedco official.
Tamil Nadu is not the first state to ask the private companies to cut tariffs. Earlier, Andhra Pradesh, Karnataka, UP and Jharkhand had asked the thermal as well as renewable (mostly solar) power firms to lower their tariffs as the rate has been falling each year and touched 2.42 per unit in Rajasthan.
It is only from thermal units, Tangedco has been able to get a discount on its tariff but with renewable power it has failed due to the must-run status. “These renewable energy PPAs are having ‘must run’ status as per their agreements. If they declare availability, we have to buy their power at the contracted rate, even though high. To accommodate this power we sometimes have to scale down thermal power, including from our own units,” said the official.
“Private companies are facing a problem as the discoms are seeking to lower the tariff. But the material cost as well as land costs are high and so, we need such tariff,” said a solar company owner.
Discoms like Tangedco will have to evacuate power as per the merit rate order. “It is from the lowest rate we start evacuating power and if the demand is high as in summer, we will be evacuating power even at the higher rate,” said the Tangedco official.
For private thermal units, it is the coal shortage which is a main problem. “We are importing coal and the payment is only in US dollar. Recently the rupee depreciated against dollar and our cost per unit was very high. But to make the discom evacuate power from us, we had to give a discount,” said an official of private power company.