PM-KUSUM Yojana: Tangedco Gets Approval to Purchase 3MW of Solar Power

Under Component – A of the Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyaan (PM-KUSUM) Scheme, Tamil Nadu Generation and Distribution Corporation Ltd (Tangedco) has received regulatory approval to procure solar power with a combined capacity of 3 MW from two farmers at a tariff of 2.99 per unit.

Individual farmers/groups of farmers/cooperatives/panchayats/Farmer Producer Organizations (FPO)/Water User Associations (WUA) can set up renewable energy-based power plants with capacities ranging from 500 kW to 2 MW under component-A of the PM-Kusum Scheme on barren/fallow land.

To minimise the high cost of sub-transmission lines and to reduce transmission losses, the renewable energy power project will be erected within a five-km radius of the sub-stations. The generated electricity will be acquired at a predetermined tariff by the local distribution business.

Union Ministry of New and Renewable Energy (MNRE) provides a procurement-based incentive of 0.40 per unit or 6.6 lakh per MW of capacity installed, whichever is less, to the distribution company for purchasing power from farmers/developers under Component A of the scheme for a period of five years.

Tangedco had previously issued a tender to purchase solar power of 1 MW to 2 MW up to a maximum capacity of 500 MW using a reserve bidding process with an upper limit of 3 per unit.

Tangedco said that it has chosen bids from T. Palani, Ladavaram, Arcot for 2 MW capacity and K. Sathyabal, Pallapatty, Dindigul East Taluk for 1 MW capacity at a rate of $2.99 per unit.

It further stated that both winning bidders declined to decrease the price further, citing one of the reasons as an increase in duty taxes for solar panels and solar equipment from 5% to 12%, which account for 70% of the entire expenditure.

Tangedco further stated that the rate provided by the two farmers is lower than rates in other states, which are over 3 per unit. The MNRE incentive reduces the tariff rate to 2.59 per unit for the first five years from the date of commercial operation, resulting in significant savings, it stated. According to the utility, MNRE authorised 75 MW for the execution of the KUSUM-Component A project for Tamil Nadu in its order dated 13-01-2021, which is effective for 24 months from the date of issue.

Tangedco was given permission by the Tamil Nadu Electricity Regulatory Commission to issue a letter of award to the two bidders and then execute a power purchase agreement for a duration of 25 years. It also ordered Tangedco to compensate for the gross generation of the two farmers' solar power systems.