The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved Tamil Nadu Green Energy Corporation Limited’s (TNGECL) proposal to procure 1,000 MWh of battery energy storage capacity, marking a significant step toward strengthening grid stability in one of India’s most renewable-heavy power systems.
The approval covers the ratification of the competitive bidding process, adoption of discovered tariffs, and authorization for TNGECL to issue Letters of Award (LoAs) and sign 12-year Battery Energy Storage Purchase Agreements (BESPAs) with the selected developers.
Project capacity and configuration
- Total approved capacity: 1,000 MWh
- Installed power capacity: 500 MW
- Storage duration: Two hours
The battery systems will be deployed across six TANTRANSCO substations in Tamil Nadu, enabling better peak management, renewable energy balancing, and grid reliability.
Procurement framework
The project has been awarded through a tariff-based competitive bidding process under the Union government’s Viability Gap Funding (VGF) scheme for battery energy storage systems. The VGF mechanism allows financial support of up to 30% of the project cost, significantly reducing the cost burden on the state’s distribution utility.
TNERC noted that battery energy storage is increasingly becoming essential as Tamil Nadu’s power system sees rising penetration of variable renewable energy, particularly solar and wind. The commission observed that conventional thermal generators face operational challenges under such variability, making storage a critical flexibility resource.
Bidders and discovered tariffs
Four bidders participated in the tender, of which three qualified for tariff discovery. The approved tariffs are as follows:
- Bondada Engineering: ₹246,000 per MW per month
- Oriana Power: ₹246,000 per MW per month
- NLC India Renewables: ₹248,000 per MW per month
TNERC ratified these tariffs after reviewing compliance with Ministry of Power guidelines, the bidding structure, and the VGF framework. The commission noted that the tariffs were competitive and within acceptable limits.
Contract tenure and execution
- Storage purchase agreement duration: 12 years
TNGECL has been authorized to:
- Issue Letters of Award
- Execute Battery Energy Storage Purchase Agreements
- Proceed with project implementation as per approved terms
Regulatory observations
TNERC clarified that while energy storage is not mandatory under Renewable Purchase Obligation (RPO) regulations, it is permitted and encouraged as a grid-stability and system-optimization solution. The commission emphasized that battery storage offers a faster and more flexible alternative compared to longer-gestation pumped hydro projects.
With this approval, Tamil Nadu moves closer to integrating large-scale battery storage into its power infrastructure, supporting its transition toward a more resilient and renewable-dominated electricity system.
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