TNERC okays medium-term power purchase, bid for 1,000 MW generator
The orders, issued on December 2, come as Tamil Nadu experiences sustained growth in electricity demand and rising deficits during peak hours.
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CHENNAI: The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved the Tamil Nadu Power Distribution Corporation Limited's plan to procure 1,580 MW of round-the-clock power under a medium-term contract and has also ratified a fresh tender for an additional 1,000 MW from generators within the state.
The orders, issued on December 2, come as Tamil Nadu experiences sustained growth in electricity demand and rising deficits during peak hours.
In its tariff adoption order, the TNERC accepted the prices discovered through a competitive bidding process and e-reverse auction held in September. The auction began at Rs 6.63 per kWh and closed with the lowest tariff at Rs 5.558 per kWh, inclusive of transmission charges and losses. Three generators offered 360 MW at this rate. As other bidders did not match the lowest price, the TNPDCL allocated the remaining 1,220 MW based on their quoted tariffs, securing prices between Rs 5.613 and Rs 6.062 per kWh.
The TNERC noted that the tariffs were comparable with similar medium-term contracts finalised in other states and much lower than short-term market prices, which touched Rs 12 per kWh during peak months. The utility has been allowed to issue Letters of Acceptance and sign power supply agreements with all 11 selected bidders for supply between February 1, 2026, and January 31, 2031.
In a separate order, the TNERC ratified TNPDCL's decision to issue a fresh tender for 1,000 MW on November 11. The utility said it issued the tender urgently due to rising demand, corridor constraints and the need to prioritise intra-State sourcing. Tamil Nadu's peak demand has grown sharply from 17,563 MW in 2022-23 to an all-time high of 20,830 MW in May 2024. Demand reached 20,148 MW in June 2025, and it was projected to rise to 22,955 MW by 2026-27.
A resource adequacy study by the Central Electricity Authority suggests that the state could face median deficits of 4,858 MW in 2026-27 and 6,997 MW in 2029-30. While solar and wind generation meet a portion of the daytime load, evening and night peaks rely predominantly on thermal and hydro stations, forcing the TNPDCL to purchase costly short-term power at rates ranging from Rs 8 to Rs 10 per kWh.
The State agency also flagged delays in major projects such as Udangudi stage I and the underperformance of the NCTPS stage III, along with the expiry of 2,830 MW of long-term PPAs by 2028-29, as factors aggravating the supply gap. Even with new additions, including battery storage, solar procurement through SECI and limited gas-based supply, the projected shortfalls remain substantial.
The TNERC has directed the TNPDCL to file a separate tariff adoption petition for the 1,000 MW tender and submit updated demand forecasts aligned with resource adequacy norms.