Briefing Note: Impact of Rooftop Solar by C&I Consumers on TANGEDCO’s Finances

The Tamil Nadu Solar Energy Policy 2019 excludes HT consumers from availing the net feed-in metering mechanism. This discourages a large segment of industrial, commercial, and institutional consumers from installing consumer category solar PV plants.

The only option available for these HT consumers for generating solar energy on their premises is to operate the plant under paralleling, in which any excess generation has to be either curtailed or stored. One key driver for excluding HT consumers from the net feed-in mechanism was a perceived revenue loss in the case of HT consumers installing rooftop solar energy systems. Under the existing cross-subsidy scheme higher tariff paying consumers are cross-subsidizing lower tariff paying consumers. 

The Tamil Nadu Solar Energy Policy sets a consumer category solar energy target of 3,600 MW by 2023. As of December 2020, 6.87% of this target has been achieved. If the target of 3,600 MW is achieved by 2023 the solar energy from consumer category solar energy will represent an approximate 4% of the total electricity consumption in Tamil Nadu only.

If the solar net feed-in mechanism with the current net feed-in tariff of 2.28 INR/kWh were made available for all C&I consumers including the HT consumer categories, then TANGEDCO will benefit from consumer category solar energy systems installed on the premises of C&I consumers by reducing its Average Cost of Supply and by increasing its net billing revenue.

Under the current schedule of tariffs, the adaptation of consumer category solar energy systems by C&I consumers presents an opportunity rather than a threat to TANGEDCO to reduce its cost of supply and improve its billing revenue.

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