en.Wedoany.com Reported - The Tamil Nadu Electricity Regulatory Commission has approved a power purchase proposal submitted by the Tamil Nadu Generation and Distribution Corporation Limited, allowing it to procure 500 MW of energy storage capacity from a pumped storage project in Andhra Pradesh to alleviate supply-demand imbalances in the local grid.
The order, issued on April 30, 2026, adopts the tariff determined under Section 63 of the Electricity Act, 2003, for procuring energy storage capacity from a grid-connected pumped storage power station operated by Greenko AP01 IREP Private Limited in the Kurnool district. Under the agreement, the annual fixed charge is INR 12.3 million per MW per year (excluding GST), with a declared cycle loss rate of 22.5%. The contract is valid for four years, with commercial operations scheduled to commence on May 1, 2026.
TANGEDCO explained to the Commission that this procurement addresses operational challenges within the state's power system. During the daytime, a surge in renewable energy sources like solar leads to excess generation, but shortages often occur during the evening peak hours from 6 PM to midnight, forcing the utility to purchase expensive power from power exchanges, with unit prices sometimes approaching INR 10. The pumped storage system is designed to optimize this imbalance: utilizing low-cost electricity during surplus periods to pump water to an upper reservoir, and releasing it to generate power during the evening peak, thereby reducing reliance on high-priced market purchases and enhancing grid reliability.
The Central Electricity Authority forecasts that Tamil Nadu's peak power demand will steadily rise from 21,959 MW in the fiscal year 2025-26 to over 35,507 MW in the fiscal year 2034-35. The energy storage procurement is seen as a measure to support the state's long-term resource adequacy planning and strengthen grid stability.
The procurement process utilized e-tendering followed by an e-reverse auction. Despite multiple deadline extensions to broaden participation, Greenko remained the sole technically qualified bidder. The distribution company negotiated with Greenko post-auction, leading to a reduction from the initial offer. The TNERC determined that the single bidder situation did not compromise the transparency and fairness of the bidding process.
The Commission also established several consumer protection measures: it requires the distribution company to install a dedicated metering system to record pumping and generation data at 15-minute intervals; the station must strictly operate according to the schedule issued by the National Load Dispatch Centre, and any financial losses arising from unscheduled operations cannot be passed on to consumers; the cost of electricity used for pumping will be reviewed during annual regulatory audits to ensure only the cheapest power is used for energy storage.
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