The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved a tariff of ₹4.47 (~$0.048)/kWh for two 15 MW solar projects integrated with 45 MWh battery energy storage systems in the Karur and Thiruvarur districts.

The projects will be implemented under a 25-year power purchase agreement (PPA).

For the Karur project, the Commission allowed Tamil Nadu Green Energy Corporation (TNGECL) to issue a letter of award to Evolve Green Energies, the L1 bidder.

For the Thiruvarur project, TNERC permitted TNGECL to award the contract to BVG India.

The Commission allowed TNGECL to execute the PPA with the developers and a power sale agreement (PSA) with Tamil Nadu Power Distribution Corporation (TNPDCL), with a trade margin of ₹0.03 (~$0.0003)/kWh.

At the same time, the regulator directed that during any battery storage outage or battery replacement period, only the solar tariff component will be payable, instead of the full composite tariff.

Background

The petitions were filed by TNGECL and TNPDCL seeking approval of tariffs discovered through competitive bidding for two solar-plus-storage projects.

The tender for the Karur project was floated in November last year. The tender for the Thiruvarur project was also floated in the same month.

Each project consists of a 15 MW solar plant integrated with a 15 MW/45 MWh battery energy storage system, capable of supplying stored electricity for three hours during peak demand periods.

The projects aim to supply firm renewable energy during evening peak hours, reduce reliance on expensive short-term power purchases, and enhance grid stability.

The bidding process was conducted in accordance with the Ministry of Power’s guidelines for renewable energy with energy storage systems.

According to the petitioners, the discovered tariff of ₹4.47 (~$0.048)/kWh was significantly lower than the estimated levelized tariff of around ₹6.49 (~$0.071)/kWh for similar solar-plus-storage projects.

The tariff structure was designed as a single composite energy tariff without separate capacity or availability charges, ensuring that payments would be linked strictly to actual energy delivered.

The petitioners added that the projects include certain performance obligations, such as:

• The minimum annual capacity utilization factor (CUF) of the solar project should be 21%. Any solar generation exceeding the 21% CUF limit in a particular month may be payable at 75% of the latest discovered rate price for solar energy or 75% of the weighted average of the solar tariff discovered during the financial year of that period, whichever is lower.
• The developer should ensure that the battery storage system discharges at least 95% of the contracted 45 MWh monthly peak energy obligation during peak hours, with 95% availability.
• The minimum round-trip efficiency for the storage system should be 85%. If, in any month within an operational year, the developer fails to achieve a minimum round-trip efficiency of 85%, the developer will be liable for damages.

Commission’s Analysis

TNERC acknowledged that integrating battery storage with solar generation can provide peak power support, improve grid flexibility, and reduce reliance on costly short-term power procurement.

However, the Commission expressed concerns about composite tariff structures, noting that they could potentially expose distribution utilities to financial risks if storage performance deteriorates or if payments are not properly linked to actual system benefits.

To address these concerns, TNERC imposed several safeguards, including:

• Limiting the DC: AC capacity ratio of solar modules to 1.3:1 to prevent excessive generation incentives. The AC capacity should be defined as the lower of the inverter nameplate capacity or the contracted capacity (15MW).
• Requiring developers to maintain 21% annual CUF and minimum peak discharge obligations.
• Mandating a minimum 85% round-trip efficiency for the battery storage system.
• Restricting tariff payments to solar benchmark rates during battery storage outages to prevent gaming of the composite tariff structure.

The Commission emphasized that the metering arrangements for the project should comply with the Central Electricity Authority regulations governing the installation and operation of meters, as well as the provisions of the Tamil Nadu Grid Code.

It directed TNGECL and TNPDCL to ensure that the metering scheme, real-time data acquisition systems, and energy accounting procedures are designed to enable accurate monitoring of solar generation, storage charging, and discharge during peak periods, and that they are implemented in accordance with the applicable regulatory framework.

Further, TNERC adopted a tariff of ₹4.47 (~$0.048)/kWh for the procurement of power from two 15 MW solar projects with 45 MWh battery energy storage systems in the Karur and Thiruvarur districts.

Recently, TNERC adopted tariffs of ₹315,000 (~$3,459)/MW/month and ₹316,000 (~$3,470)/MW per month for 375 MW/1,500 MWh battery energy storage projects.

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