Tamil Nadu to add 18,000MW power generation capacity in 10 years

Turning its focus to renewable energy sources, the state government has decided to add 17,980MW of power generation capacity in the next 10 years. The move is aimed at cutting down high-cost power purchases done by Tangedco from power exchanges and private generators, said state finance minister P T R Palanivel Thiaga Rajan in the assembly on Friday while presenting the state Budget.
High-cost power purchases account for almost half of the expenditure of the discom on an annual basis. The state government is also likely to sign a memorandum of understanding with the Indian Renewable Energy Development Agency, a government of India enterprise, for advisory services in the renewable energy sector.
While the state’s average power demand is about 15,000MW, the installed capacity of Tangedco’s own existing thermal power plants is only 4,320MW. Of them, 12 thermal units, which generate 2,520MW, are more than 25 years old and need to be replaced soon. The state is relying more on the central generating stations and private generators to provide uninterrupted power supply, which would mean more funds to fulfil payment obligations. Even the central generating stations supply only 4,500MW though they are committed to supply 6,000MW as per agreements with the state. It resulted in Tangedco going for high-cost private power purchases, leading to huge financial burden.
“The DMK government is keen on investing more on renewable energy sources like solar and hydel, and gas in the next five years to reduce highcost power purchase. The initial estimate is that Tangedco will have to raise more than ?1 lakh crore for this,” said a highly placed source. With environmental concerns being raised against thermal plants globally, the government considers solar projects the best bet as it comes at a cheaper rate than other sources. The plan is also to cover all districts where feasibility for solar power parks is high and integrate the sources for better transmission. Since solar power generation takes place only during the day, it has to be linked with sources like hydel and gas-based power generators to provide uninterrupted power supply during the night.
Once the generation from solar projects commences, power purchase from private generators will reduce, which will result in huge savings for the discom. As of now, Tangedco is repaying loans at interests ranging from 9.5% to 13.5% per annum. “With the IREDA showing keenness in offering its advisory support, the state will soon sign an agreement to better understand the renewable energy sector, its dynamics, analyse evolving policy and regulatory landscape for projects and gauge expansion plans and technology adoption,” said another source. PTR on Friday said a strategic study of Tangedco’s and Tantransco’s governance and financial restructuring would be undertaken. The government will act speedily on the findings to revamp the utilities and save them from collapse.