The tender conditions stipulate that the base fixed charge shall not exceed 70% of the total tariff and the base fuel charge shall not exceed 50%
CHENNAI: The Tamil Nadu Power Generation Corporation Limited has invited bids to revive and complete the long-stalled Ennore Thermal Power Station expansion project through a public-private partnership, aiming to secure long-term electricity supply to meet the State’s rising power demand. The project involves setting up a 1x660 MW supercritical coal-fired thermal power unit at Ennore, near here, on a design, build, finance, own and operate basis.
The TN Power Generation Corporation Limited will act as the nodal agency on behalf of Tamil Nadu Power Distribution Corporation Limited (TNPDCL), which will procure power from the project under a long-term power purchase arrangement.
The State government approved a proposal in March 2012 to establish a new 660 MW supercritical expansion unit in the adjacent area. An engineering, procurement and construction contract was awarded to Lanco Infratech in May 2014, with commissioning scheduled for January 2018. The project, however, ran into difficulties as construction stalled due to the contractor’s financial problems.
By March 2018, physical progress was below 20%, leading to termination of the contract in April that year. In December 2019, the project was re-awarded to BGR Energy Systems on an as-is-where-is basis. That contract was also terminated in February 2024 owing to unsatisfactory execution, leaving the partially completed project idle.
Against this backdrop, the State has decided to revive the Ennore expansion through the PPP route, citing the urgent need to augment generation capacity. The proposed unit will have an installed capacity of 660 MW, with 617 MW contracted for supply to the State utility. Power supply is expected to commence within 48 months from the appointed date.
The successful bidder will be responsible for completing the remaining works on an as-is-where-is basis, arranging finance, operating and maintaining the plant, and supplying electricity under a long-term power supply agreement. The project will be awarded to the bidder quoting the lowest tariff, which will comprise a fixed charge and a fuel charge.
The fixed charge will be linked to plant availability, while the fuel charge will be linked to actual generation, based on coal supplied through an allocated linkage. The tender conditions stipulate that the base fixed charge shall not exceed 70% of the total tariff and the base fuel charge shall not exceed 50%.
Under the proposed power purchase agreement, TNPDCL will procure electricity on a long-term basis at the discovered tariff for the contracted capacity. Payments will be governed by availability-based norms, with provisions for penalties if the developer fails to meet performance parameters or declared capacity.
The revival of the Ennore project comes amid a sharp rise in electricity demand in TN. The State’s peak power demand has increased by more than 6,000 MW over the past eight years and touched 20,830 MW in May 2024, already surpassing earlier estimates for the current financial year. Projections indicate that peak demand could rise to over 21,700 MW by 2026–27 and exceed 28,000 MW by 2031–32.
During summer months, the gap between demand and availability has widened, with the State utility often unable to secure sufficient power from exchanges even at ceiling prices.