India’s Tamil Nadu Sets Solar Tariff as Program Stalls

The electricity regulator for India’s Tamil Nadu set a price for solar-power producers after failing for the past two years to attract investments to a state that gets about 300 days of sun a year.

Tamil Nadu’s state-run distribution utility will pay 7.01 rupees (11 cents) a kilowatt-hour for power from solar photovoltaic plants and 11.03 rupees a kilowatt-hour to plants using solar-thermal technology, according to an order on the Tamil Nadu Electricity Regulatory Commission’s website.

Tamil Nadu has made barely any headway toward its solar target announced two years ago of installing 3,000 megawatts by 2015. Investment stalled after the state distribution utility and regulator separately tried to lower tariffs, ignoring rates reached with developers through an auction of projects.

The state’s solar policy, introduced in October 2012, ordered large energy consumers to source at least 6 percent of their electricity from solar -- a rule that was challenged by companies in court. Tamil Nadu has only built 109 megawatts of solar plants to date, according to the order.

The latest tariff, which plants will be able to earn for 25 years, assumes investors won’t claim accelerated depreciation tax benefits. For those that do, the tariff drops to 6.28 rupees a kilowatt-hour for photovoltaic plants and 9.88 rupees for solar-thermal plants.

Solar-thermal technology focuses sunlight on liquids to produce steam to run conventional turbines, while photovoltaic panels convert rays directly to electricity.

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