The Tamil Nadu Electricity Regulatory Commission has approved a significant initiative by the Tamil Nadu Transmission Corporation Limited (TANTRANSCO) to lease substation land to developers for a nominal fee of Re. 1 per project per year. This decision, formalized in an order dated August 28, 2025, aims to facilitate the integration of renewable energy into the state’s power grid by enabling the establishment of Battery Energy Storage Systems (BESS) at six of TANTRANSCO’s substations. The move is part of a broader plan to implement a 1,000 MWh BESS under the Central Government’s State Component of the Viability Gap Funding (VGF) scheme, which is managed by the Tamil Nadu Green Energy Corporation Limited (TNGECL).
India has set an ambitious goal of achieving 500 GW of renewable energy capacity by 2030. In Tamil Nadu, renewable energy sources such as solar and wind already contribute around 23,940 MW to the state’s energy capacity. However, renewable energy is intermittent and cannot provide electricity consistently throughout the day. This variability creates challenges for grid operators, who must continuously adjust thermal power generation to balance supply and demand. Battery Energy Storage Systems are seen as an essential solution to manage these fluctuations. While long-term solutions like Pumped Storage Plants are under development, BESS offers a quicker and effective option to stabilize the grid in the near term.
Under the Central Government’s VGF scheme, states with high renewable energy penetration receive financial support to develop BESS. The scheme provides a grant of up to 30% of the project’s capital cost or ₹27 lakh per MWh, whichever is lower. Tamil Nadu has been allocated 1,000 MWh of BESS capacity under this program. The proposed projects will be implemented at six substations: Thennampatty, Anuppankulam, Ottapidaram, Vellalaviduthi, Kayathar, and Karaikudi, totaling 500 MW/1,000 MWh. Private developers will build, own, and operate these projects on a lease basis for 15 years, while TANTRANSCO will provide the required land without affecting its primary transmission activities.
The commission has set several conditions to ensure the projects are implemented safely and effectively. TANTRANSCO will conduct studies on grid connectivity and technical feasibility. Developers are required to sign a 15-year lease agreement for the land and comply with all relevant State and Central Government policies, including safety regulations. The projects must not interfere with TANTRANSCO’s transmission operations or future capacity expansion plans.
This initiative represents a collaborative effort between state and central authorities to enhance renewable energy integration and ensure a reliable power supply for Tamil Nadu. By providing land for BESS development at a nominal fee and supporting private participation, the state aims to stabilize the grid, manage renewable energy variability, and move closer to achieving India’s renewable energy targets. The successful implementation of these projects will benefit the public by providing consistent electricity from clean energy sources while strengthening the state’s power infrastructure.
This move highlights Tamil Nadu’s commitment to innovation in energy management and reflects the growing importance of Battery Energy Storage Systems in supporting the transition to a sustainable and resilient power grid.
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