Tamil Nadu: Coal-only power bids lower rates by half

CHENNAI: Tamil Nadu’s move to restrict short-term power procurement to coal-based thermal plants has brought down quoted rates to Rs 20 per unit from a high of Rs 41.50 in earlier tenders. But the lower prices have come at the cost of availability, with generators offering less than half the power sought in most procurement periods, even as the state braces for a sharp rise in power demand next summer.

The fifth short-term tender, floated by Tamil Nadu Power Distribution Corporation Ltd (TNPDCL) on November 1, attracted bids ranging from Rs 9.50 to Rs 20 per unit for round-the-clock (RTC) supply between January 18 and June 15, 2027.

TNPDCL received just 81 MW against 2,000 MW sought for the second half of January, meeting 4.1% of its requirement. February saw the best response, with 1,381 MW offered against 3,000 MW sought (46%). Offers met 42.8% of the requirement for March, 37.7% for April and 36.8% for May. For the first half of June, generators offered only 181 MW against 2,500 MW sought, meeting 7.2%.

The shortfall assumes significance as the state’s projected evening peak power deficit is expected to rise from 1,388 MW in January to 5,544 MW in April 2027. The deficit is projected at 3,987 MW in May and 4,796 MW in June, increasing the pressure on TNPDCL to secure additional supplies.

TNPDCL may consider buying power at rates of up to Rs 12/unit after negotiating with generators, sources said. The utility’s board will take a call on the offers. With the bids falling short of its requirement, TNPDCL is also considering medium-term procurement of around 2,000 MW to meet demand and contain costs.

The coal-only condition was introduced after the first three short-term tenders attracted bids of up to Rs 37, Rs 41.50 and Rs 35 per unit respectively. Gas-based generators were among those quoting higher rates, prompting the utility to restrict eligible sources. The fourth tender was cancelled.

Unlike earlier tenders, which sought both peak-hour and RTC power, the latest tender invited bids only for RTC supply. Interstate and intrastate generators and licensed traders were eligible, provided the electricity was sourced exclusively from coal-based thermal plants.

Meanwhile, TNPDCL has floated a tender to appoint a consultant to draw up its long-term power procurement strategy. The consultant will assess future demand, review existing and proposed procurement arrangements, and recommend the quantum of electricity to be sourced over the coming years.

The exercise will also factor in the addition and retirement of thermal power capacity, transmission availability for importing electricity from other states and the cost of different procurement options.

TNPDCL currently procures 2,830 MW from 11 generators under long-term agreements. Contracts with nine generators expire on September 30, 2028, while those with the remaining two, accounting for a combined 708 MW, end on March 31, 2029.