Tangedco to float tender to purchase 800 MW for 5 yrs

CHENNAI: The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved a proposal by the Tamil Nadu Power Distribution Corporation Ltd. (TNPDCL) to float a medium-term tender for the procurement of 800 MW of round-the-clock (RTC) power for five years. The power will be sourced from generators across India under the Finance, Own and Operate (FOO) model, with supply scheduled to begin in February 2026.

Given the concerns about congestion in the inter-regional transmission corridor, the TNPDCL has proposed to divide the planned 1,500 MW procurement into two tenders. The first, which has now been approved, will seek 800 MW from interstate generators. A separate tender will be floated for the procurement of 700 MW from power producers within Tamil Nadu. Procuring power from within the state is expected to reduce transmission losses and eliminate interstate transmission charges.

The move comes at a critical time, as several of TNPDCL’s long-term power purchase agreements (PPAs) are set to expire. Since 2014, the utility had entered into 11 long-term PPAs with a total capacity of 3,330 MW, but one power purchase agreement involving 500 MW was terminated. At present, TANGEDCO is procuring 2,830 MW under the remaining long-term agreements, all of which are due to lapse by the financial year 2028–29.

This impending shortfall coincides with a sharp increase in electricity demand. Tamil Nadu's peak demand rose from 17,563 MW in 2022 to 20,830 MW in 2024. Projections indicate a median deficit of 4,858 MW in 2026–27 and nearly 7,000 MW by 2029–30, taking into account upcoming capacity and the expiry of existing contracts.

To address the issue, the TNPDCL has drawn upon the Resource Adequacy Plan for Tamil Nadu (2024–25 to 2034–35), prepared by the Central Electricity Authority (CEA). The study forecasts persistent energy shortages over the next decade, with a potential unserved energy level of 45,587 million units by 2034–35. The shortfall is expected to be most severe during non-solar hours, particularly from October to April.

The national guidelines on resource adequacy suggest that distribution licensees should meet between 75 and 80% of their requirements through long-term contracts, 10 to 20% through medium-term arrangements, and the remainder through short-term sources. Since long-term procurement may take up to four years to become operational, the TNERC observed that medium-term tenders would help bridge the gap in the interim.

The Commission also reiterated earlier directions to the TNPDCL to sell surplus power in the real-time market without price limits, explore battery storage and hydro or gas-based generation options, and adopt advanced software for demand forecasting and power procurement planning. The TNERC further directed the utility to submit demand assessment data and a comprehensive generation and procurement strategy in line with the TNERC (Framework for Resource Adequacy) Regulations, 2025, along with the tariff adoption petition.