In a move that comes as a relief to solar power developers in Tamil Nadu, the State’s electricity regulator has empowered the State electricity distribution company, Tangedco, to administer the ‘solar purchase obligation’ mandated by the State Government’s solar policy.

“The SPO will be administered by Tangedco,” Tamil Nadu Electricity Regulatory Commission (TNERC), said in its recent order.

The implication of this is that the decks have been cleared for the State Government to crack the whip on ‘obligated consumers’ who do not meet the SPO (which they can do either by putting up their own solar plant or buying solar power from either Tangedco or others.)

The formal empowerment of the State distribution company, which is an arm of the State Government, is significant against the backdrop of poor compliance with the Central renewable purchase obligation. (Under the federal RPO mechanism, the Central Electricity Regulatory Commission names ‘obligated entities’ who have to either buy green power, including a specified chunk of solar power, or instead, buy renewable energy certificates from the market. But this mandatory obligation has largely been ignored by the obligated entities. The power generators complain that the respective state regulatory commissions have not been pulling them up.)

TNERC’s order states that if any ‘obligated consumer’ has not complied with the obligation, Tangedco will issue ‘solar renewable energy certificates’ from the market and collect the money from the defaulting obligated consumers. Further, Tangedco will buy the solar RECs at the ‘forbearance price’, or the highest price allowed under the REC mechanism. The ‘forbearance price’ for the 2012-17 period is Rs 13.40 a unit.

“TNERC’s order is a welcome policy development as it will facilitate rapid development of solar power in Tamil Nadu as enforcement of the SPO will ensure a massive ramp up of solar power development in the state,” says Rahul Sankhe, Director – Business Development, SunEdison, a US-headquartered solar power developer and the largest foreign investor in solar power space in the country.

Rahul, however, cautions that speeding up of evacuation approvals would be necessary to achieve the SPO targets.