TNPDCL plans multi-pronged procurement to manage summer power deficit

CHENNAI: Tamil Nadu faces a potential peak power deficit of up to 7,971 MW in summer 2027, with peak demand touching 23,672 MW, prompting Tamil Nadu Power Distribution Corporation Limited (TNPDCL) to plan a mix of long-term and medium-term contracts, short-term purchases, power swaps and market procurement to ensure uninterrupted supply.

An in-house assessment has estimated the peak shortfall at 3,610-6,568 MW, while independent consultant Mercados has projected a deficit of 4,834-7,971 MW.

The Tamil Nadu Electricity Regulatory Commission (TNERC) has cleared TNPDCL’s proposal to float a short-term tender for round-the-clock and peak-hour power between February and July 2027. The utility is preparing for a projected peak demand of 23,672 MW, against the all-time high of 21,724 MW recorded on July 14 this year. The plan seeks to secure power in advance, reducing dependence on spot-market purchases when availability is limited and prices are high.

TNPDCL’s planning mix includes about 1,500 MW through long-term arrangements, 1,500 MW through medium-term contracts, 2,000-3,200 MW through short-term or shaped procurement, and around 500 MW through power swaps and banking. Residual requirements would be met through power exchanges and other market arrangements, depending on demand and availability.

The utility’s existing procurement framework covers about 70% of its requirement through long-term arrangements and around 10% through medium-term contracts. Short-term purchases are used to meet the remaining requirement, including seasonal demand. The proposed mix is intended to complement these arrangements rather than replace them.

Under the short-term tender, TNPDCL can procure round-the-clock power and additional supply between 6 pm and midnight. The combined quantum proposed for the peak period is 2,880 MW in February 2027, 2,000 MW in March, 3,200 MW each in April and May, and 2,000 MW each in June and July.

The advance procurement plan follows an unusual pattern in 2026, when high demand continued beyond the usual summer period and wind generation proved inadequate during certain spells. The regulator also took note of the risk of prolonged heatwaves and El Niño-related weather conditions affecting demand and power availability next year.

TN recorded its highest daily energy consumption of 475.447 million units on July 17, 2026. TNPDCL has told the regulator that power exchanges alone cannot reliably meet the anticipated shortfall, as purchases depend on market availability and prevailing prices.

During peak periods, electricity prices in the market have been around Rs 10/unit. TNPDCL has historically managed to procure only 15%-25% of the quantity bid for in some time blocks, even when bids were placed at the price ceiling, highlighting the risk of relying on spot purchases.

The Central Electricity Authority’s Resource Adequacy Plan has also indicated a short-term procurement requirement of 2,674 MW for Tamil Nadu in 2027-28. TNERC has permitted TNPDCL to float the tender through the DEEP portal. The approval does not amount to adoption of the tariff discovered through bidding.

The utility will have to approach the commission separately for tariff adoption under Section 63 of the Electricity Act, 2003.