TN Sets INR 50 Lakh/MW 'Resource Charge' for CTU Wind Projects

In a strategic move to boost its renewable energy framework, Tamil Nadu has introduced a new INR 50 lakh per megawatt (MW) 'resource charge' on wind projects connected to central transmission infrastructure.

This directive, effective for both new and pending wind projects, aims to address the state's renewable purchase obligation (RPO) and optimise the management of wind resources. This policy shift is a response to the observation that numerous wind projects within Tamil Nadu are linked to the Power Grid Corporation of India’s central grid, thus bypassing the state's RPO.

The Tamil Nadu Green Energy Corporation Ltd (TNGECL) has articulated that this charge seeks to correct an imbalance where wind power contributions from these projects benefit other states' RPOs rather than Tamil Nadu’s. Industry experts express concerns that the new charge may exacerbate the challenges faced by wind project developers in Tamil Nadu. 

The state, known for its high land prices and rapid urbanisation, has struggled to secure suitable land for renewable energy projects. The TNGECL has noted that this urban sprawl has made it increasingly difficult to establish wind power infrastructure. The Union Ministry of Power has set a wind RPO target of 0.67 percent for the fiscal year 2024-25, with expectations to increase this figure to 3.48 percent by 2029-30.

The RPO is designed to ensure that state-owned utility Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) meets its renewable energy supply commitments, with stringent penalties for non-compliance. To meet these objectives, the TNGECL’s note emphasises the need to incentivise wind power projects that connect directly to the State Transmission Utility (STU), thereby bolstering local energy supply and compliance with RPO requirements.

It should be noted that Since 2018, Tamil Nadu has seen approximately 1,700 MW of wind projects linked to central transmission utilities, with much of this power being redirected to fulfill RPOs in other states. The newly imposed INR 50 lakh per MW resource charge is intended to redirect future wind projects and pending applications towards the state grid, thereby enhancing Tamil Nadu's energy autonomy. The state has set an ambitious target of achieving 5,000 MW of wind power by 2030. Despite its status as India's leading state for wind energy, Tamil Nadu is facing increasing competition from Gujarat and Karnataka.

Gujarat currently leads in wind capacity with 11,723 MW, while Karnataka is rapidly expanding its wind energy sector. Tamil Nadu, which has added 1,299 MW of wind power from 2019-20 to 2023-24, now holds the second position with a total capacity of 10,603 MW, trailing behind Gujarat’s 11,723 MW.