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TNERC Rejects TNGECL’s Petition on Solar Procurement Under PM-KUSUM

The Tamil Nadu Electricity Regulatory Commission (TNERC) has dismissed a petition by Tamil Nadu Green Energy Corporation Ltd. (TNGECL) seeking approval to procure 420 MW of solar power under the PM-KUSUM Scheme Component-A. The petition aimed to ratify the tender process and secure long-term Power Purchase Agreements (PPA) with farmers for decentralized solar energy generation. However, TNERC found multiple issues with the proposal, leading to its rejection.

About the PM-KUSUM Scheme

Launched by the Ministry of New and Renewable Energy (MNRE), the PM-KUSUM Scheme supports farmers in setting up solar power plants on their land. Under Component A, solar projects between 500 kW and 2 MW are installed near substations to power agricultural feeders, reducing transmission losses and promoting renewable energy. The scheme also incentivizes farmers and distribution companies (DISCOMs) to participate in solar power generation.

Issues Identified by TNERC

• TNGECL's petition requested approval to proceed with its tender without specifying an upper ceiling tariff, violating previous TNERC orders and MNRE guidelines.
• The company sought permission to sign long-term PPAs with four farmers for 5 MW of capacity at Rs3.28 per unit, determined through a reverse bidding process, which was higher than prevailing rates in other states.
• Concerns were raised regarding the inconsistencies in how TNGECL planned to pass on Procurement-Based Incentives (PBI) to farmers.
• Limited participation was a major concern; although the bid aimed for 420 MW, only four farmers participated, offering just 5 MW in total.

Criticism and Directives

TNERC criticized TNGECL for inadequate promotion, which restricted broader farmer participation. The lack of transparency and poor outreach efforts led the Commission to direct TNGECL to rework the tender.

Future Improvements Mandated by TNERC

• Adherence to MNRE guidelines when issuing tenders.
• Increased transparency and better promotion of tenders, including advertisements in both Tamil and English.
• Consultation with DISCOMs before finalizing procurement plans.
• Creation of an online portal to help farmers lease their land for solar projects.
• Exploring direct payment mechanisms to farmers for land leases, encouraging their involvement in renewable energy generation.

The Commission’s decision underscores the importance of regulatory compliance, transparency, and wider participation in renewable energy projects. Ensuring adherence to MNRE guidelines and engaging more farmers will help Tamil Nadu expand decentralized solar energy and support its clean energy transition effectively.