Tamil Nadu Clears Landmark 1,000 MWh Battery Storage Procurement to Stabilize Renewable-Heavy Grid

The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved Tamil Nadu Green Energy Corporation Ltd. (TNGECL)’s plan to procure 1,000 MWh of battery energy storage systems (BESS), marking one of India’s largest state-led storage deployments. The decision, issued on December 4, 2025, authorizes long-term procurement under a 12-year build–own–operate framework, supported by the Union Government’s Viability Gap Funding (VGF) program.

Project Overview

• Capacity: 500 MW across two discharge cycles, totaling 1,000 MWh.

• Locations: Six TANTRANSCO substations – Thennampatty, Anuppankulam, Ottapidaram, Vellalaviduthi, Kayathar, and Karaikudi.

• Tariffs: ₹246,000–₹248,000 per MW per month, discovered through competitive bidding.

• Winning bidders: Bondada Engineering (200 MW), Oriana Power (50 MW), NLC India Renewables (250 MW).

• Funding support: Up to 30% of project cost covered under VGF, reducing burden on Tamil Nadu’s distribution licensee.

Why It Matters

Tamil Nadu already hosts 26 GW of renewable energy capacity, among the largest in India, with significant variability from wind and solar. Pumped hydro projects are under development but face long gestation periods. Battery storage offers a near-term solution to balance intermittency, reduce reliance on costly short-term market purchases, and ensure resource adequacy during peak demand.

Tamil Nadu has established itself as one of India’s leading renewable energy states, with a diversified portfolio that makes a significant contribution to the national grid. As of November 2025, the state’s installed renewable energy capacity stood at nearly 26.9 GW, comprising over 12 GW of wind power, 11.5 GW of solar, close to 1 GW of bio-power, and more than 120 MW of small hydro, alongside 2.1 GW of large hydro. This mix ensures year-round generation, with wind complementing solar to balance seasonal and daily variations. Tamil Nadu alone accounts for more than 10 percent of India’s total renewable energy capacity, and nearly one-fifth of the country’s wind installations, underscoring its role as a national hub for clean energy. The state’s leadership is further reinforced by its proactive adoption of storage solutions, such as the recently approved 1,000 MWh battery energy storage procurement, which will enhance peak load management and renewable integration. With strong industrial demand and export-oriented manufacturing, Tamil Nadu’s renewable energy growth not only strengthens India’s energy security but also advances national decarbonization goals under the Renewable Purchase Obligations and the National Green Hydrogen Mission. This combination of scale, diversity, and innovation positions Tamil Nadu as a cornerstone of India’s clean energy transition.

The systems will primarily charge using surplus solar power during the day and discharge during morning and evening peak windows, directly addressing grid stress and improving utilization of renewable assets.

Regulatory Context

TNERC emphasized that while battery procurement is not mandatory under Renewable Purchase Obligations (RPOs), it is critical for grid stability and cost optimization. The Commission ratified TNGECL’s tender as a special case, noting that tariffs were competitive and below ceiling rates set under the Ministry of Power’s 2022 guidelines.

The regulator also highlighted that the allocation of capacity among three qualified bidders ensures full utilization of Tamil Nadu’s 1,000 MWh VGF allotment, positioning the state as a frontrunner in structured storage adoption.

Market Implications

• Grid modernization: The approval marks a milestone in Tamil Nadu’s push to modernize its power system.

• Consumer benefits: Reduced dependence on expensive short-term purchases will lower costs for end-users.

• National impact: The project sets a benchmark for other renewable-rich states, aligning with India’s broader decarbonization and energy security goals.

In summary: TNERC’s approval of TNGECL’s 1,000 MWh battery storage procurement is a decisive step toward stabilizing Tamil Nadu’s renewable-heavy grid. With competitive tariffs, central funding support, and strategic deployment across six substations, the initiative strengthens both state and national ambitions for clean, reliable energy.

Renewable Energy Society of India (RESI), "Renewable Energy Chronicles – The Power Saga (ISBN: 978‑81‑993949‑6‑4)