CHENNAI: The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved Tamil Nadu Power Distribution Corporation Ltd. (TNPDCL) to procure 1,500 MW of round-the-clock (RTC) power through a single medium-term tender for five years, allowing the utility to contract an additional 700 MW over and above the 800 MW already cleared earlier. The supply is scheduled to commence from February 1, 2026.
In its order, the TNERC accepted the utility's submission that medium-term procurement would be more cost-effective than frequent short-term purchases from power exchanges, especially during evening peak and night hours when solar generation is unavailable. The TNPDCL stated that it has often been compelled to procure power at high spot market rates during peak demand periods to address shortfalls.
Tamil Nadu has witnessed a steady rise in electricity demand in recent years, driven by industrial growth, urbanisation, higher cooling loads due to rising temperatures, agricultural requirements and increasing electric vehicle penetration. The state recorded an all-time high demand of 20,830 MW in May 2024, exceeding earlier projections. Peak demand for 2026-27 is projected at about 22,955 MW, underlining the scale of the capacity challenge facing the utility.
Resource adequacy assessments indicate that Tamil Nadu is likely to face persistent energy deficits over the next decade as existing and planned capacity, particularly during non-solar hours from October to April.
By factoring in generation availability, delays in new thermal projects and the expiry of long-term power purchase arrangements aggregating 2,830 MW in 2028-29, the TNPDCL has assessed a median shortfall of approximately 4,858 MW in 2026-27 and nearly 6,997 MW by 2029-30.
While wind and solar contribute significantly during the day, the variability of renewables and the absence of solar generation during peak hours make firm round-the-clock capacity critical for grid stability.
The 1,500 MW medium-term procurement will be undertaken through tariff-based competitive bidding under the Finance, Own and Operate framework. TNPDCL has sought limited deviations from the standard bidding documents to provide commercial clarity and safeguard its interests. The Commission reiterated that the utility should optimise surplus power during non-solar hours through market sales, explore battery energy storage systems to shift surplus solar generation to peak periods, and strengthen demand forecasting and resource planning to ensure reliable and cost-effective supply.