CHENNAI: In a first, the Tamil Nadu Generation and Distribution Corporation (Tangedco) is set to adopt the Design, Build, Own, Operate, and Transfer (DBOOT) method to avoid long-term Private Purchase Agreements and create more assets.
Using this method, the state-owned utility is set to float an e-tender in the first week of January for solar parks with a combined capacity of 1,000 MW in six districts, Electricity Minister V Senthil Balaji on Wednesday told TNIE. A senior Tangedco official added that a total of 3,293 acres had been acquired in the six districts Tiruvarur, Chengalpattu, Karur, Salem, Erode, and Kancheepuram to install the plants. With the e-tender, foreign investments are expected as well.
According to the official, Tangedco has always procured power through long-term or short-term Private Purchase Agreements for decades, leading the utility to spend 50 to 60% of its income on power. “With long-term agreements, we have to invest more money sometimes. For example, a few years ago, the utility signed agreements with private solar power producers under long-term agreements (a period of 15-20 years).
The cost of power stood at Rs 5 to Rs 7 per unit then. But, as of date, the solar power cost has come down to Rs 3.30 per unit which leads to losses,” the official explained. (Despite the costs coming down, the utility would have to pay Rs 7 to firms as per the agreement)
Following research, Tangedco opted to implement the DBOOT system. Now, the utility could obtain an asset within a shorter period of time and there would be no need for long-term power purchase, the official added.
DBOOT to allow private entities to back projects
Heal Another official explained that TANGEDCO plans to establish 20,000 MW of solar energy power stations with 10,000 MW battery storage systems over the next 10 years. In the first phase, an e-tender will be floated and an announcement would be made for the second tender to install 3,000 MW solar parks in other districts before March. The utility also aims to adopt the DBOOT system with solar and wind.
Upcoming projects for windmills would be initiated with this method. With the DBOOT method, a private entity receives recognition from the public sector to finance, design, construct, own, and operate a facility. The private entity will have the right to operate for a set period of time. By doing this, the project proponent will recover its investment, operating and maintenance expenses.
