The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved a proposal by the Tamil Nadu Power Distribution Corporation Limited (TNPDCL) to procure 600 MW of solar power integrated with a 300 MW / 1,800 MWh Energy Storage System (ESS). The approval was issued through an order dated October 22, 2026, allowing the state distribution utility to secure renewable electricity under a 25-year power purchase agreement through the Solar Energy Corporation of India Limited (SECI).
The procurement will be carried out under SECI’s Inter-State Transmission System (ISTS)-connected Tranche XXI Scheme. The approved tariff is ₹3.12 per kWh, with an additional SECI trading margin of ₹0.07 per kWh. The arrangement is designed to provide daytime solar electricity alongside dispatchable power during periods of higher demand, particularly in the evening and early morning hours.
Under the proposed supply arrangement, the project developer will provide continuous solar power during daytime hours and deliver 300 MW of dispatchable electricity for six selected hours within the designated peak window, which extends from 6:00 PM to 9:00 AM the following day. The project is required to achieve commissioning within 24 months from the effective date of the Power Purchase Agreement (PPA).
The proposal was submitted after the reorganisation of Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO), which resulted in the formation of TNPDCL. The distribution company’s board approved the procurement proposal at its 135th meeting on February 24, 2026. This followed SECI’s formal communication of the tariffs discovered through an electronic reverse auction conducted in January 2026.
The procurement is intended to address Tamil Nadu’s increasing electricity demand and the growing requirement for dependable power during peak consumption periods. According to demand projections based on data from the Central Electricity Authority (CEA) and TNPDCL, the state’s peak electricity demand is expected to increase from 20,701 MW in financial year 2024–25 to more than 35,000 MW by FY 2034–35.
The utility’s assessment indicated that existing power purchase arrangements, short-term open access procurement and conventional thermal generation would not be sufficient to meet future demand reliably, particularly during evening and early morning peak hours. Integrating energy storage with solar generation is expected to improve the availability of renewable electricity when demand rises and solar generation declines.
The project will also support the state’s efforts to meet its Renewable Purchase Obligation (RPO) targets and improve grid stability. By securing renewable electricity through a long-term arrangement, TNPDCL aims to reduce its dependence on volatile and potentially expensive short-term electricity market purchases.
The TNERC bench comprised Chairman Dr. J. Radhakrishnan, Member Thiru A.R. Mascurnas and Legal Member Tmt A. Muthusaratha. The Commission directed TNPDCL to proceed in accordance with applicable Ministry of Power guidelines and regulatory requirements.
TNPDCL will approach the Commission for formal tariff adoption under Section 63 of the Electricity Act, 2003, after the relevant contractual agreements are finalised.
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