Tangedco flags high cost of offshore wind projects, demands that Centre bear entire investment

CHENNAI: Tamil Nadu Generation and Distribution Corporation (Tangedco) has expressed concern over the high transmission cost of Rs 4.20 per unit for the 1,000 MW offshore wind power project to be developed along the State's coastline as it would push the energy cost to Rs 8 per unit.

At the 50th Southern Regional Power Committee meeting, the State power utility said the high transmission charges make offshore wind energy unviable. Hence, the Centre should bear the entire investment on transmission projects for the offshore project to promote it and make it viable.

The Ministry of New and Renewable Energy (MNRE) has planned to auction 37,000 MW offshore wind potential on the coast of Tamil Nadu and Gujarat in a phased manner by 2029-30. In the first phase, 5,000 MW offshore wind potential each at Tamil Nadu and Gujarat would be auctioned. Tamil Nadu government has offered to procure offshore wind energy up to 2,000 MW to be generated off the state's coast at the flat rate of Rs 4 per unit.

The transmission system proposed for the 1,000 MW offshore wind scheme on Tamil Nadu's coast would be developed at Rs 11,485 crore which translates into a tentative transmission tariff of Rs 4.2 per unit. The cost of offshore energy would cross Rs 8 per unit if the transmission charge of Rs 4.2 per is included. "It will make the generation and transmission of projects economically unviable and give tariff shock to the end-consumers," Tangedco said.

Tangedco has questioned the MNRE for restricting the viability gap funding to only a 1,000 MW project and developing 35,000 MW through non-VGF. "Since the predetermined tariff agreed by Tangedco is Rs 4 per unit for 2,000 MW, restricting the VGF category for 500 MW and allocating the rest of the quantum under the non-VGF projects will have tariff implications. Hence it is essential to ensure that the entire 2000 MW should be allocated under VGF," the utility demanded.

Central Transmission Utility of India Ltd (CTUIL) said the major cost of the transmission system is up to the shore only including subsea cable cost and offshore substations. "Based on the information available with CTUIL regarding the cost of the subsea cable, the estimated cost of offshore substation and subsea cable for interconnection with the onshore pooling station was more than Rs 5,000 crore per 500 MW. The cost of on-shore transmission was estimated at around Rs 1,200 crore," it said.