Chennai, Oct 26:
The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved a proposal to procure 600 MW of solar power backed by battery storage at an effective tariff of ₹3.19 per unit, including the trading margin, under a 25-year arrangement aimed at meeting the state’s growing electricity demand and reducing peak-hour shortages.
In an order dated October 22, the commission approved the Tamil Nadu Power Distribution Corporation Ltd’s (TNPDCL) proposal to purchase the power from the Solar Energy Corporation of India (SECI). The discovered tariff is ₹3.12 per unit, with an additional trading margin of ₹0.07 per unit payable to SECI.
The arrangement includes a 300 MW/1,800 MWh energy storage system. TNPDCL will receive 600 MW during solar generation hours and can draw 300 MW of storage-backed electricity for six selected hours within the peak-demand window extending from 6 pm to 9 am the following day. Battery storage is expected to help make renewable energy available after sunset, when solar generation falls but electricity demand can remain high.
The commission’s approval comes amid projections of a substantial increase in Tamil Nadu’s peak-hour power deficit over the coming years. According to estimates submitted by TNPDCL, the peak-hour shortage could rise from 9,735 MW in 2026-27 to 16,332 MW by 2034-35 before accounting for the proposed procurement. Even after factoring in planned power purchases, the utility projected a deficit of 7,037 MW in 2026-27, increasing to 14,457 MW by 2034-35.
The tariff of ₹3.12 per unit was determined through an electronic reverse auction conducted on January 9, 2026. TNPDCL’s board approved the proposed procurement at its 135th meeting on February 24, 2026. Power supply is expected to begin 24 months from the effective date of the power purchase agreement.
The commission noted that fluctuations in solar generation and the difficulty of matching renewable energy supply with demand after sunset posed challenges for the electricity network. Storage-backed power could improve grid stability and help the state meet its renewable purchase obligations.
However, TNERC clarified that TNPDCL must approach it separately for tariff adoption after finalising the tender, in accordance with Section 63 of the Electricity Act, 2003. The approval is subject to applicable bidding guidelines, scheme conditions and relevant regulations.