CHENNAI: Tamil Nadu can procure 600 MW of solar power backed by a battery storage system at Rs 3.19 per unit, including the trading margin, under a 25-year arrangement approved by the Tamil Nadu Electricity Regulatory Commission (TNERC) to help meet rising power demand and reduce peak-hour shortages.
In an order dated October 22, the commission approved the Tamil Nadu Power Distribution Corporation Ltd's (TNPDCL) proposal to procure the power from the Solar Energy Corporation of India (SECI) at a discovered tariff of Rs 3.12 per unit, plus a trading margin of Rs 0.07 per unit payable to SECI.
The arrangement includes a 300 MW/1,800 MWh energy storage system, enabling the state to draw 300 MW of storage-backed power for six selected hours within the peak-hour window of 6 pm to 9 am the following day. TNPDCL will receive 600 MW during solar generation hours.
According to TNPDCL's projections submitted to the commission, the state's peak-hour power shortage could rise to 16,332 MW by 2034-35, compared with 9,735 MW in 2026-27, before accounting for the planned procurement considered in its analysis. Even after factoring in proposed procurement, the utility projected a peak deficit of 7,037 MW in 2026-27, increasing to 14,457 MW by 2034-35.
The order noted that variations in solar generation and the need for electricity after sunset posed challenges to meeting demand. Energy storage would help make renewable power available during selected hours when solar generation was unavailable, while supporting grid stability and the state's renewable energy purchase obligations.
The tariff of Rs 3.12 per unit was determined through an e-reverse auction conducted on January 9, 2026. TNPDCL's board had approved the proposed procurement at its 135th meeting on February 24, 2026. Supply is expected to commence 24 months from the effective date of the power purchase agreement.
However, the commission clarified that TNPDCL must approach it separately for tariff adoption after finalising the tender, in accordance with Section 63 of the Electricity Act, 2003. The approval is subject to applicable bidding guidelines, scheme conditions and relevant regulations.