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Tamil Nadu Solar Energy Policy Review and Analysis – Why solar investors should sit up and take notice

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New Solar Energy Policy in Tamil Nadu

India’s electricity woes are known to Greenworldinvestor as we have been repeatedly highlighting the massive deficits suffered by individual states particularly in the southern India. Now these states are turning to solar power to alleviate some of their electricity issues. Andhra Pradesh’s solar policy which was enacted a month ago, gave a rapid fire clearance to solar power projects beside others incentives. Tamil Nadu has been preparing a solar energy policy for quite some time and has finally come out with a comprehensive policy which touches a number of subjects. Note Tamil Nadu is the biggest renewable energy state in India and accounts of almost 40% of the country’s wind power capacity. The strong growth has been due to the support given by the government which has made it the de facto wind capital of India. The state also has a vibrant wind manufacturing industry in the state with some top wind energy companies having their factories in Tamil Nadu.

Note opportunistic investors had already anticipated this policy and bought large parcels of land in Tamil Nadu’s sun belt which gets over 300 days of sun a year.

Why Solar Investors should sit up and take Notice

Tamil Nadu is one of India’s most prosperous and industrially advanced states located at its southernmost extreme. The state has shown remarkable progress in the  field on Wind Energy utilizing almost 80% of its Wind Power Potential with 40% of India’s total Wind Installations. With the right mix of policies, Tamil Nadu has also become the hub of Wind Energy Manufacturing with Global Heavyweights like Suzlon, Gamesa, Vestas all building plants in the State. A number of new players like Sterling Infotech and Lietner have also started manufacturing Wind Turbines in Tamil Nadu due to favorable networking effects. The state is also generates the 3rd largest amount of biomass energy with around 340 MW installed. Here are the reasons why Tamil Nadu has become the Biggest Renewable Energy State in India.

The previous success of Tamil Nadu in the wind energy sector makes the implementation of the 1000 MW a year target for 2013 -2015 look achievable. While the rest of the states announce ambitious policies for green energy,their implementation track record makes one doubt their claims. However Tamil Nadu is one of India’s most industrialized and fast growing states. Like Gujarat, the state’s governance structure and implementation record is much better relative to other states. So when TN announces a solar policy, solar companies around the world should sit up and take notice.


Solar power equipment manufacturers, solar power generators, consumers and industry associations have welcomed the Tamil Nadu State Solar Energy Policy 2012. The policy announced on Saturday targets establishment of 3,000 MW of solar power generation by 2015, provides generation-based incentives for roof-top systems, mandates 6 per cent minimum purchase obligation from 2014, beginning with 3 per cent next year, and provides a package of incentives for solar equipment manufacturers.

Also Read on GWI:

Tamil Nadu Solar Energy Policy Review and Analysis

Title and Enforcement

This policy will be known as the “Tamil Nadu Solar Energy Policy – 2012”. The Government of Tamil Nadu will undertake a review of this Policy as and when required in view of any technological breakthrough or any changes taking place in the policy at the National level.

Key Objectives

  • To project Tamil Nadu as a Solar Hub
  • To generate 3000 MW of Solar Energy by 2015
  • To achieve grid parity by 2015
  • To encourage indigenous solar manufacturing facilities in the State

Development of Solar Power in Tamil Nadu

Phase (2013-2015)                Target (MW)

2013                                          1000

2014                                          1000

2015                                          1000

Total (by 2015)                     3000

With average solar incidence of 5.5-6 kWh/m2/day, Tamil Nadu is amongst the states with the highest solar insolation in India. To retain its leadership position, Tamil Nadu will promote setting up solar power projects to the extent of 3000 MW over a period of 3 years, as furnished above.

Tamil Nadu will actively promote the solar energy sector by prescribing a certain percentage of electricity consumption through solar energy as mandatory. This will be progressively increased.

Solar Purchase Obligation (SPO)

The State will mandate 6% SPO (starting with 3% till December 2013 and 6% from January 2014) for the following category of consumers:

HT Consumers (HT Tariff I to V)

This category will cover all HT consumers including:

  • Special Economic Zones (SEZs)
  • Industries guaranteed with 24/7 power supply
  • IT Parks, Telecom Towers
  • All Colleges & Residential Schools
  • Buildings with a built up area of 20,000 sq.m or more

The SPO will be administered by TANGEDCO.

The above obligated consumers may fulfill their SPO by

  • Generating captive Solar Power in Tamil Nadu equivalent to or more than their SPO
  • Buying equivalent to or more than their SPO from other third party developers of Solar Power projects in Tamil Nadu
  • Buying RECs generated by Solar Power projects in Tamil Nadu equivalent to or more than their SPO
  • Purchasing power from TANGEDCO at Solar Tariff
  • Consumers desirous of availing SPO exemption by captive solar generation shall necessarily install separate meters to measure captive generation

This mechanism will require generation of 1000 MW by 2015.

Mechanism to generate 3000 MW by 2015

The 3000 MW of Solar Power will be achieved through Utility Scale Projects, Rooftops, and under REC mechanism as follows:

Utility Scale (MW) Solar Roof Tops (MW) REC (MW) Total (MW)
(a) (b) (c) a + b +c
2013 750 100 150 1000
2014 550 125 325 1000
2015 125 125 675 1000
Total 1500 350 1150  3000

In utility scale out of 1500 MW, 1000 MW will be funded through SPO and balance 500 MW through Generation Based Incentive (GBI) provided by the Government.

Domestic Rooftop GBI

All domestic consumers will be encouraged to put up roof-top solar installations. A generation based incentive (GBI) of Rs 2 per unit for first two years, Re 1 per unit foe next two years, and Re 0.5 per unit for subsequent 2 years will be provided for all solar or solar-wind hybrid rooftops being installed before 31 March, 2014. A capacity addition of 50 MW is targeted under this scheme.

Consumers desirous of availing GBI shall necessarily install separate meters to measure rooftop generation.

Promoting Rooftops in Government

All new Government/Local Body buildings shall necessarily install solar rooftops

  1. Existing Government/Local Body buildings will be provided with solar rooftops in a phased manner
  2. All Street Lights and Water Supply installations in local bodies will be energized through solar power in a phased manner

Promotion of Solar Water Heating Systems

Public Buildings

The Government of Tamil Nadu has issued amendments to the Building Rules through the following Government Orders, making the use of solar water heating systems mandatory for all designated new Houses/buildings/Marriage halls/hotels etc.


Installation of Solar water heating systems will be made mandatory for industries having hot water boiler/steam boiler using fossil fuel.

Development of Solar Parks

Utility scale solar parks may comprise 250 MW in sizes of 1 to 5 MW, 600 MW in sizes of 5 to 10 MW and 650 MW of sizes above 10 MW. Solar Power projects will be developed through competitive/reverse bidding. Solar Parks with a capacity of about 50 MW will be targeted in 24 districts.

Single Window Agency (TEDA)

Various statutory clearances that are essential for the development and commissioning of Solar Energy Projects will be handled by TEDA in co-ordination with the concerned departments/agencies. Guaranteed single window clearance will be provided through TEDA in 30 days so that the plants can be commissioned in less than 12 months

Exclusive Solar Manufacturing Parks

Lands will be identified for development of exclusive solar manufacturing parks. The State will promote setting up of solar manufacturing industries in these exclusive solar manufacturing parks to be established in the State.

Preference in Industrial Parks

Preference will be given for establishing Solar manufacturing industries in the SEZs/Industrial estates / Parks viz., SIPCOT, SIDCO and similar Government organizations

Establishment of Solar Power Plants in Industrial Estates

In order to reduce the Transmission & Distribution losses, Aggregate Technical & Commercial (AT&C) losses and other infrastructure expenditure, Solar Power Plants will be set up in all industrial estates subject to availability of land at reasonable cost

Policy Initiatives

Net Metering

Net metering will be allowed (at multiple voltage levels) to promote rooftop penetration

Net metering facility will be extended to Solar power systems installed in commercial establishments and individual homes connected to the electrical grid to feed excess power back to the grid with “power credits” accruing to the Photovoltaic energy producer.

Projects to evacuate power at suitable voltages as suggested below

Solar PV System Size Grid Connected
<10 kWp 240 V
10 kWp to < 15 kWp 240 V / 415 V
15 kWp to < 50 kWp 415 V
50     Wp to < 100 kWp 415 V
>100 kWp 11 KV

Exemption from Payment of Electricity Tax

Exemption from payment of electricity tax to the extent of 100% on electricity generated from Solar Power projects used for self-consumption/sale to utility will be allowed for 5 years.


Solar Gold Rush

The Indian state of Tamil Nadu, which is set to announce a solar subsidy policy soon, is seeing a massive gold rush. Note in India, the information about Government policy is generally leaked to big industrialists and insiders much before the actual government regulations are released. This gives a huge advantage to the big industrial houses who can prepare themselves accordingly. Huge chunks of land in the dust bowls of  Tamil Nadu districts are being bought for less than $6000/acre. The reason is that developers and opportunists are building up land banks to set up huge solar farms.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

3 Responses so far | Have Your Say!

  1. Anandh Sundar

    Nice post, I’m sure most people would not have heard of this before you blogged on it, thanks for the link and analysis. It is interesting that there is incentive for domestic rooftop solar panels but not for others. Also, a second point is that feedin credits to the grid should also vary as per time of day, which I doubt has been done here