TNERC Approves 1,500 MW RTC Power Procurement To Address Tamil Nadu’s Rising Energy Deficit

The Tamil Nadu Electricity Regulatory Commission has approved Tamil Nadu Power Distribution Corporation Limited to procure 1,500 MW of Round-the-Clock power for a period of five years. The approval was issued on February 5, 2026, and allows the utility to combine an earlier approved requirement of 800 MW with an additional 700 MW into a single medium-term power procurement tender. This power will be procured under the Finance, Own, and Operate model, with certain approved deviations aimed at protecting the commercial interests of the state utility.

The need for this large procurement arises from a growing power shortage expected in Tamil Nadu over the coming years. As per studies conducted by the Central Electricity Authority, the state may face a median power deficit of around 4,858 MW in the financial year 2026-27. This shortage is projected to increase further to nearly 6,997 MW by 2029-30. Although Tamil Nadu has one of the highest installed renewable energy capacities in the country, most of this comes from solar and wind power, which are considered infirm sources. Solar generation drops to zero during night hours, and wind power is seasonal, making it difficult to meet evening peak demand reliably.

At present, TNPDCL often has to depend on short-term and emergency power purchases from electricity exchanges to manage demand. These purchases are expensive, with power prices sometimes touching Rs 8 to Rs 10 per unit. By entering into a medium-term Round-the-Clock contract, the utility expects to secure power at a more stable rate of around Rs 5.50 per unit. This move is expected to result in significant cost savings and reduce exposure to volatile market prices.

Several operational factors also influenced the Commission’s decision. Long-term power purchase agreements for about 2,830 MW are scheduled to expire during 2028-29, which could further tighten supply. In addition, delays in commissioning of new generation projects such as Ennore SEZ and Kudankulam Unit-4 have added pressure on the state’s power system. The Commission also noted that a previous attempt by TNPDCL to procure power only during peak hours did not succeed, as generators were not interested in supplying electricity for limited time windows. As a result, the shift to a Round-the-Clock tender was considered a more practical and reliable approach.

The Commission has issued clear directions to ensure efficient management of this procurement. TNPDCL has been instructed to sell any surplus power in the Real-Time Market during periods of low demand to recover costs. The utility has also been directed to adopt advanced tools such as artificial intelligence and machine learning-based systems to improve demand forecasting and optimize power purchase decisions.

This 1,500 MW procurement forms an important part of Tamil Nadu’s Resource Adequacy plan, which targets covering 75 to 80 percent of power demand through long-term contracts and 10 to 20 percent through medium-term arrangements. With the scheduled supply start date set for February 1, 2026, TNPDCL will be required to submit a detailed report explaining how this procurement supports long-term reliability and cost efficiency when seeking final tariff approval.