Tamil Nadu will now charge ₹50 lakh per MW for wind projects that are connected to the central transmission infrastructure (like those built by Power Grid Corporation of India). This comes amid the State’s view that most wind projects set up in the State get hooked to the central grid; such projects do not count as part of the state meeting its ‘renewable purchase obligation’ (RPO).
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Industry insiders argue that this will make wind projects in Tamil Nadu, where land is already costly, unviable. “Due to fast urbanisation, identifying land parcels to establish wind power projects is quite challenging,” states a note by the Tamil Nadu government on ‘Collection of Resource charges for CTU connected wind power projects in Tamil Nadu.’
The note, by the new state-owned company Tamil Nadu Green Energy Corporation Ltd (TNGECL), observes that the Union Ministry of Power had fixed wind RPO of 0.67 per cent for 2024-25, which will increase to 3.48 per cent by 2029-30. (The number is the quantum of wind energy supplied by the state-owned electricity utility, TANGEDCO). There are penal charges for non-compliance.
“Hence, to utilise the available limited wind resources for meeting our state power and RPO requirement, it is necessary to encourage STU connected wind power projects,” the TNGECL note states.
Applicable to projects pending approval
Since 2018, about 1,700 MW of central transmission utility-connected wind power projects have been commissioned in Tamil Nadu. The wind power generated from these CTU projects is transmitted through 400KV central transmission network and is being utilised in other States to meet their own RPO obligations, the note points out.
Thus, the ₹50 lakh per MW ‘resource charge’ is applicable “for all future projects and pending applications”, is essentially meant to dissuade wind energy companies from hooking their projects to the central grid and to supply electricity within the state. Notably, Tamil Nadu has set itself an “ambitious target” of 5,000 MW of wind power by 2030.
Tamil Nadu, India’s windiest state and the birthplace of the country’s wind industry, is already losing ground to other states, mainly to Gujarat, with Karnataka fast catching up. In the four years between 2019-20 and 2023-24, the country has added 8,143 MW of wind power. Tamil Nadu contributed 1,299 MW (16 per cent), Gujarat 4,182 MW (51 per cent) and Karnataka, which started much later, contributed 1,228 MW (15 per cent). Today, Tamil Nadu ranks second in terms of wind capacity, with 10,603 MW, after Gujarat’s 11,723 MW.
Discriminatory, says industry
UB Reddy, a wind industry insider and Vice-Chairman of Indian Wind Power Association, told businessline that the ₹50 lakh per MW ‘resource charge’ is “discriminatory” as it is selectively levied on CTU-connected projects. Secondly, since the new charges apply to even projects pending approval, it is not fair, because the energy companies would have bid for tariffs not counting the new charges. “Fresh investments in Tamil Nadu will dry up,” cautioned Reddy.
Echoing similar views, Parag Sharma, President, Wind Independent Power Producers’ Association (WIPPA), said “If each State levies resource or similar charges, it will add to the cost of electricty and that is not in the interest of the country. This will lead to a race among States to collect such levies, which will indirectly impact their discoms.”
Reddy also noted that as per the Electricity Act, 2003, generation is delicensed. Tamil Nadu cannot stop a wind company from buying private land, putting up a wind farm and connecting it to central transmission infrastructure. However, in practical terms, it is not easy to do a project opposing a state government.
One industry insider noted that even Gujarat once took such a discriminatory measure, refusing to give lands for wind projects that would sell electricity to other States, but that move was quickly revoked.