Indian Ministry Warns States Against Solar Power Curtailment

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The Ministry of New and Renewable Energy in India has once again issued a warning to states against the practice of curtailing solar power generation.

The Ministry has specifically asked the officials of the Tamil Nadu Generation and Distribution Corporation not to curtail solar power generation by forcing project operators to back down generation.

Officials at TANGEDCO have been informed again that solar power projects, as well as wind energy projects, have must-run status, that is power utilities must procure all electricity generated by them. The Ministry stated that it received complaints from several plant operators that utilities have forced them to reduce generation.

A major complainant is Adani Green Energy which operates a 216 megawatt solar power project in Tamil Nadu, part of India’s largest solar power installation. The company has been facing heat from TANGEDCO not only on the curtailment issue but also on the tariff for the said power plant. Adani sells the power generated at 7.01/kWh (11.0¢/kWh), which is more than twice the lowest solar power tariff at present in India.

Tamil Nadu government has reportedly initiated negotiations with Adani for revision of the tariff.

India has a very large pipeline of solar power projects following an ongoing series of large capacity auctions. The capacity addition has been at a much faster rate compared to the addition of transmission capacity. With increased competition tariffs have been in a free fall over the last few months.

The sharp decline in tariffs and the lack of adequate transmission capacity seem to be the major reasons for utilities to backdown generation. Tariffs is a major driver in this case as TANGEDCO shut down thermal power plants when wind energy generation increased sharply a couple of months back. Wind energy tariffs in Tamil Nadu are about half that of the tariff for the Adani solar project.

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