Policy Revision

Focus on solar development in Tamil Nadu but no mention of hybrids

Tamil Nadu has been one of the early adopters of solar power in the country. With abundant solar irradiation, strong political will and favourable policy measures, the state has been able to rapidly scale up capacity. Soon after the launch of the National Solar Mission (erstwhile Jawaharlal Nehru National Solar Mission) in 2010, Tamil Nadu released its own solar policy in 2012. It was a benchmark policy as it included provisions for solar net metering. In the same year, the state also released the “Tamil Nadu Vision 2023” document, which set a solar energy target of 5,000 MW to be achieved by 2023. However, with the revision of the 2022 targets, the Ministry of New and Renewable Energy (MNRE) set a new solar energy target of 9,000 MW for Tamil Nadu. In October 2018, Tamil Nadu reached over 2.2 GW of installed solar power capacity, of which 2,098 MW is ground-mounted and 122.6 MW is rooftop solar.

In order to achieve the set targets, the state requires new policy instruments, programmes, and financial, operational and evaluation parameters. Meanwhile, plans for grid integration, smart grid management and energy storage need to be devised. To this end, the state government has recently released the Tamil Nadu Solar Policy, 2019, to provide an inclusive framework that caters to utility-scale and commercial solar energy generation.

Key features

  • Vision: The policy document has been developed with a vision to promote solar energy as a major contributor to the sustainable energy future of Tamil Nadu. Solar will be a significant part of the state’s energy strategies for demand-side management, energy efficiency and conservation, distributed generation, electric mobility and smart grids. The policy aims to make solar energy accessible and affordable to all while reducing the carbon and water footprint of the state.
  • Objective: The policy has been released with the objective of translating the solar energy vision into enabling processes. It identifies instruments that can help the state achieve its solar obligations set by the Tamil Nadu Energy Regulatory Commission (TNERC). It is also an attempt to facilitate open access to create both competition and opportunities for distributed grid-connected solar generation companies. In addition, the policy includes provisions for providing a single-window clearance system and incentivising solar energy projects.
  • Applicability: Tamil Nadu’s solar energy policy is applicable to projects and programmes for both solar photovoltaic (PV) and solar thermal energy in the utility-scale and consumer categories, such as captive, group captive and rooftop solar. The policy reaffirms the MNRE target of 9,000 MW for Tamil Nadu to be achieved by 2023. Of this, 40 per cent or 3,600 MW has been earmarked for consumer category projects.
  • Operative period: Released in February 2019, the policy will remain in effect until superseded by another policy. The outcomes of the policy will be evaluated annually against its objectives.
  • Tariffs: Solar energy will be fed into the grid at utility-scale tariffs determined under the competitive bidding process and approved by TNERC. Net metering feed-in tariffs, however, will be determined by TNERC. Also, the commission may introduce time-of-day solar energy tariffs to encourage feed-in of solar energy when the demand is high.
  • Implementation models: According to the policy, there will be two implementation models for solar energy projects in the state. The upfront ownership model, generally known as the capex business model, requires the owner to pay the capital cost to the developer/supplier and take ownership of the system. In the deferred ownership, or opex. model the solar system is installed and operated by the supplier, which receives performance-based or lease-based payments from the owner/purchaser for a certain period. At the end of the defined period, the system ownership in this case is transferred to the purchaser.
  • Mandates: All government-owned buildings have been directed to install solar power systems. All municipal corporations and bodies are required to use solar energy-based street lights and water supply installations. Meanwhile, the policy aims to promote the use of solar thermal for industrial applications.
  • Incentives: All consumer category solar energy projects will be exempted from paying electricity tax for a period of two years from the date of the policy release. The solar energy generated by non-obligated entities may be used by the distribution licensee to fulfil its own renewable purchase obligations. The policy also promotes the manufacturing of solar energy components. To this end, the state government will provide land to manufacturers and facilitate a single-window approval system with defined time limits. The policy also provides incentives to farmers to promote solar energy in the agricultural sector.
  • Energy evacuation: The system capacity at the service connection point for consumer category solar projects has been limited to 100 per cent of the sanctioned load. Meanwhile, the maximum cumulative solar capacity at the distribution transformer may be reviewed and determined by TNERC to enable optimal solar energy penetration. All new and replaced service connection meters in the state will be bidirectional in order to be ready for net metering regulations expected in the future. The distribution licensees will provide an updated status of the cumulative solar capacity at each distribution transformer.
  • Wheeling: The policy does not permit wheeling at the low tension voltage level, while for high tension consumers TNERC regulations for open access will be applicable. Moreover, wheeling of power for less than 1 MW of capacity will not be allowed.
  • Energy accounting: The accounting of energy will be done on a slot or block basis. The excess energy will be considered as infirm power, which will be sold under the discom category at a tariff determined by TNERC.
  • Grid integration: To manage the increasing integration of solar energy into the grid, Tamil Nadu Generation and Distribution Corporation (TANGEDCO), in consultation with TNERC, will add pumped-hydro and energy storage systems, and flexibilise coal-based power generation.
  • Research and development: According to the policy, the state will facilitate and support solar energy research by forming a research fund in collaboration with the Tamil Nadu Energy Development Agency (TEDA) and other government departments.
  • Role of state agencies: While TEDA will lead the implementation of the policy, TANGEDCO will be responsible for the design and development of innovative solar energy projects. It will deploy these projects in various modes including public, private, public-private partnership and build-own-operate-transfer. Meanwhile, TEDA will be responsible to facilitate access to concessions and incentives provided by the MNRE including cost subsidies. It will also provide advisory and consulting services to corporations, municipalities and urban local bodies on financing instruments for solar energy projects. TANGEDCO will be responsible for the development of energy storage projects, solar parks, floating solar parks and other technologies in collaboration with the Solar Energy Corporation of India.


With the new policy in place, Tamil Nadu’s standing among the country’s top solar energy generators is expected to improve. As of October 2018, it occupied the fifth position, by solar installed capacity, with Karnataka in the lead, followed by Telangana, Rajasthan and Andhra Pradesh. In fact, Andhra Pradesh recently came out with its own solar and solar-wind hybrid policies. The Tamil Nadu solar policy, on the other hand, only briefly touches upon the importance of developing innovative technologies such as energy storage and floating solar in the state. Meanwhile, the solar-wind hybrids segment is conspicuous by its absence in the policy.

By Ashay Abbhi


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