The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved the procurement of 270 MW of firm and dispatchable renewable energy (FDRE) by Tamil Nadu Power Distribution Corporation (TNPDCL) from Solar Energy Corporation of India (SECI).

The procurement has been approved for 25 years at the discovered tariffs of ₹5.06 (~$0.0557)/kWh for 120 MW and ₹5.07 (~$0.0558)/kWh for 150 MW.

The Commission also approved the payment of a trading margin of ₹0.07 (~$0.00077)/kWh to SECI.

Background

SECI issued a tender in October 2024 to procure 1,200 MW of round-the-clock power. It offered TNPDCL, the petitioner, 120 MW at ₹5.06 (~$0.0557)/kWh and 150 MW at ₹5.07 (~$0.0558)/kWh, with expected commissioning within 24 months of signing the power purchase agreement.

TNPDCL justified the procurement based on projected peak demand growth, renewable energy integration requirements, resource adequacy obligations, renewable purchase obligation (RPO) targets, and the need to reduce dependence on thermal power.

Demand projections prepared by the Central Electricity Authority indicated peak demand in Tamil Nadu would increase from 19,409 MW in 2023–24 to 26,046 MW in 2028–29 and further to 35,507 MW by 2034–35, reflecting annual growth of approximately 5% to 6%.

Energy consumption was projected to increase from 130,223 million units in 2023–24 to 152,678 million units in 2025–26 and reach 249,580 million units by 2034–35, with annual growth gradually declining from 9.4% to about 5.1%. The resource adequacy plan also projected significant additions to solar, wind, storage, hydro, and short-term open-access capacity.

TNPDCL highlighted the increase in RPO targets under TNERC’s 2023 regulations, which rise from 29.91% in 2024–25 to 43.33% by 2029–30. The utility projected compliance gaps, including a shortfall of 8,116 million units in 2025–26 and 10,392 million units in 2026–27.

It also noted that TNPDCL was in the process of tying up battery energy storage systems totaling up to 2,590 MWh, while national projections indicated a requirement of 37 GWh by 2027 and 236 GWh by 2031–32.

It argued that FDRE provides a near-term solution to intermittency and grid-stability challenges, whereas pumped-storage projects require longer implementation timelines.

Commission’s Analysis

The Commission found that the procurement process was transparent, with the competitive bidding framework compliant with the Ministry of Power’s guidelines.

It held that the discovered tariffs of ₹5.06 (~$0.0557)/kWh and ₹5.07 (~$0.0558)/kWh were market-aligned and not excessive, particularly considering the firm and dispatchable nature of the renewable supply.

The Commission found the quantum of 270 MW proportionate to projected demand growth and consistent with the long-term resource adequacy plan vetted by the Central Electricity Authority.

It also observed that FDRE procurement would address intermittency, support peak demand requirements, improve grid stability, and assist in meeting statutory renewable purchase and capacity obligations.

The Commission noted broader policy and planning considerations, including India’s target to achieve 50% of installed capacity from non-fossil fuel sources by 2030 and to reduce emission intensity by 45% from 2005 levels.

It also referred to projections in the National Electricity Plan indicating that renewable capacity will reach 596 GW by 2032, including 365 GW of solar and 122 GW of wind. Tamil Nadu’s share of renewable energy is expected to increase from 30% to 50% by 2030.

Accordingly, TNERC granted approval for the 270 MW FDRE procurement for 25 years.

Recently, TNERC notified the Tamil Nadu Electricity Grid Code, 2026, to address increasing renewable penetration and enhance grid stability.

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