Revolutionizing Renewable Energy Storage: Tamil Nadu’s New Incentive Policy for Power Plant Developers
In a groundbreaking move to stabilize the fluctuating nature of renewable energy sources, the Tamil Nadu government has rolled out an innovative policy aimed at encouraging both public and private sectors to invest in Pumped Storage Projects (PSPs). Designed to store surplus energy during low demand times and dispatch it during peak periods, these PSPs are poised to play a crucial role in enhancing the reliability of renewable energy.
The ambitious Tamil Nadu Pumped Storage Projects Policy 2024 plans to catapult the development of PSP facilities by simplifying site identification processes. It delineates a framework where public sector undertakings may develop certain PSP sites through direct selection or competitive bidding, while also allowing private entities the liberty to establish their own off-river closed-loop PSP sites.
With an impressive renewable energy (RE) installation footprint of 22,628 MW, including 10,790 MW from wind and 7,800 MW from solar, Tamil Nadu is leading the charge in India’s renewable energy domain. The inherent challenge of RE’s fluctuating output—solar power peaking during daylight and wind power intensifying at night—makes the technology behind PSPs even more significant. These storage projects can effectively bridge the gap, offering a sustainable solution to utilize green energy more efficiently and reduce the dependency on non-renewable power sources.
The newly introduced PSP policy is not just about promoting energy efficiency but also about creating an attractive investment landscape for both public and private sectors. It ensures a clear regulatory environment, coupled with financial incentives and a straightforward approval mechanism, all designed to mitigate investment risks and streamline project development.
The policy differentiates between off-river closed-loop PSPs, which are constructed away from natural water sources, and on-river PSPs that maintain a hydraulic connection with natural water bodies such as rivers or lakes. It shows a clear preference for assigning on-river PSP development to central or state public sectors or their joint ventures, with Tamil Nadu Green Energy Corporation Ltd (TNGECL) playing a pivotal role as the state-designated agency to manage these projects.
Moreover, developers involved in these projects will encounter a structured fiscal arrangement. For instance, electricity consumed for pumping purposes may incur a charge of up to Rs 0.25 per unit, while power sold outside the state can be charged up to Rs 0.50 per unit. Additionally, there are specific provisions regarding one-time filling facilitation charges and annual fees payable to TNGECL, alongside water charges for the initial reservoir filling.
On the horizon, the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has outlined ambitious plans to install 15 PSP projects with a cumulative capacity of 14,500 MW. Key projects in the pipeline include Sillahalla Stage-I and Stage-II, Kodayar, Manalar, and Aliyar among others. These initiatives are currently in various stages of planning and environmental clearance, marking a significant step forward in the state’s renewable energy agenda.
As Tamil Nadu leads by example in harnessing the potential of PSPs to stabilize renewable energy supply, the environment for renewable energy investment in the region is set to become more appealing. The strategic vision of the Tamil Nadu Pumped Storage Projects Policy 2024 aims not only at enhancing green energy utilization but also at inviting greater participation from the private sector to innovate and invest in the future of sustainable power.
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