The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved a major initiative by the Tamil Nadu Green Energy Corporation Limited (TNGECL) to set up 1,000 MWh of standalone Battery Energy Storage Systems (BESS) across the state. This project falls under the “State Component” of the Viability Gap Funding (VGF) scheme introduced by the Ministry of Power to encourage the integration of renewable energy and enhance grid stability. With Tamil Nadu’s renewable energy capacity reaching around 23,940 MW, the variability of solar and wind power has increasingly stressed thermal plants and the transmission network. While the state is implementing 15 Pumped Storage Projects, these typically require long construction periods. In this context, BESS offers a faster solution to manage fluctuations in demand and maintain grid reliability.
The BESS facilities will be developed under a Build-Own-Operate (BOO) model at six TANTRANSCO sub-stations, including Thennampatty, Anuppankulam, Ottapidaram, Vellalaviduthi, Kayathar, and Karaikudi. The total planned capacity of 500 MW is designed to discharge for four hours daily over two cycles, covering morning and evening peak demand periods. Under the VGF scheme, the Central Government will provide financial support in the form of a grant, covering up to 30% of the capital cost or ₹27 crore per MWh, whichever is lower.
To select developers, TNGECL will conduct a tariff-based Competitive Bidding process, followed by an e-reverse auction. Bidders are required to quote “capacity charges” on a per MW per month basis, with an upper ceiling tariff set at ₹2,50,000 per MW per month. Eligible bidders must demonstrate financial strength, including a net worth of at least ₹40 lakh per MWh and an average annual turnover of ₹50 lakh per MW. These requirements are intended to ensure that developers have the capacity to deliver and maintain high-quality projects.
The project’s organizational structure defines TNGECL as the project management authority responsible for bid management and overall execution. The Tamil Nadu Power Distribution Corporation Limited (TNPDCL) will act as the end beneficiary, supplying the input power needed to charge the batteries, primarily from low-cost solar energy. TNPDCL will also enter into a Battery Energy Storage Purchase Agreement (BESPA) with the successful developers for a period of 12 years.
Strict performance standards have been mandated in the TNERC order. Developers must ensure 95% annual system availability and a minimum round-trip efficiency of 85%. Failure to meet these standards, or delays in commissioning the projects beyond the 18-month deadline, will attract penalties, including liquidated damages or encashment of performance bank guarantees. These measures are designed to ensure that the BESS projects reliably support the grid while protecting public investment.
Following the approval, TNERC has instructed TNGECL to file a separate adoption petition within 30 days of issuing Letters of Award to the successful bidders to finalize the discovered tariffs. This step will pave the way for implementing the projects efficiently and integrating battery storage into Tamil Nadu’s renewable energy ecosystem. By introducing BESS at scale, the state aims to address the challenges posed by the intermittent nature of renewable energy, reduce stress on thermal plants, and enhance overall grid stability, while providing a model for near-term energy storage solutions in India.
This project represents a significant step toward modernizing Tamil Nadu’s electricity infrastructure and supporting the state’s transition toward a more reliable and renewable-based energy system.
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