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					</table><p>The Tamil Nadu Electricity Regulatory Commission (<a href="https://tnerc.tn.gov.in/" target="_blank" rel="noopener">TNERC</a>) has approved a provisional additional tariff subsidy of ₹15.45 billion (~$161.3 million) for FY 2026-27 to compensate Tamil Nadu Power Distribution Corporation (TNPDCL) for revenue loss from the state government’s decision to increase free electricity for domestic consumers.</p>
<p>The subsidy applies to domestic consumers who consume up to 500 units in a bimonthly billing cycle. These consumers will receive 200 units of free electricity bimonthly, effective May 10, 2026.</p>
<p>Domestic consumers who consume more than 500 units bimonthly will continue under the existing tariff structure, including the existing 100 units of free electricity.</p>
<p>TNPDCL informed the Commission that the state government had allotted ₹17.30 billion (~$180.6 million) annually as an additional tariff subsidy. Since the policy came into effect on May 10, 2026, the provisional subsidy for FY 2026-27 has been calculated for 326 days, from May 10, 2026, to March 31, 2027.</p>
<p>The Commission approved ₹15.45 billion (~$161.3 million) as a provisional subsidy for the period.</p>
<p>The subsidy is linked to the additional free electricity provided in the 101 to 200 unit consumption slab. The first 100 units were already covered under the earlier tariff subsidy order.</p>
<p>For consumers with bimonthly consumption above 100 units and up to 200 units, the subsidy for the 101 to 200 unit slab has been estimated at ₹4.39 billion (~$45.8 million) for 326 days.</p>
<p>For consumers with bimonthly consumption above 200 units and up to 500 units, the subsidy for the 101 to 200 unit slab has been estimated at ₹11.06 billion (~$115.5 million) for 326 days.</p>
<p>The subsidy will be released in four tranches. The government must release ₹2.46 billion (~$25.7 million) immediately for the period from May 10, 2026, to June 30, 2026. It must release ₹4.36 billion (~$45.5 million) by June 30, 2026, for the second quarter, and ₹4.36 billion (~$45.5 million) by September 30, 2026, for the third quarter.</p>
<p>The final tranche of ₹4.27 billion (~$44.6 million), covering January 1, 2027, to March 31, 2027, must be released by December 31, 2026.</p>
<p>TNERC said the approved subsidy is provisional and will be reconciled later based on actual consumption data submitted by TNPDCL. The distribution company must submit a reconciliation report to the Commission.</p>
<p>In February, the Supreme Court had <a href="https://www.mercomindia.com/supreme-court-raps-tamil-nadu-over-subsidized-electricity-promise" target="_blank" rel="noopener">rapped</a> Tamil Nadu over its promise of subsidized electricity, questioning how the state could guarantee free or subsidized power while its distribution company continues to incur heavy financial losses. Hearing TNPDCL’s challenge to Rule 23 of the Electricity (Amendment) Rules, 2024, which mandates cost-reflective tariffs, the Court warned that absorbing DISCOM losses through subsidies could strain public finances and affect economic growth.</p>
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TNERC Clears Subsidy for Tamil Nadu’s Free Power Program


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					</table><p>The Tamil Nadu Electricity Regulatory Commission (<a href="https://tnerc.tn.gov.in/" target="_blank" rel="noopener">TNERC</a>) has approved tariffs in the range of ₹3.02 (~$0.0315)/kWh to ₹3.09 (~$0.0323)/kWh for the procurement of 12 MW of solar power under Component-A of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) program.</p>
<p>The Commission also approved the issuance of Letters of Award (LoAs) by Tamil Nadu Green Energy Corporation (<a href="https://www.tngecl.org/en/greenenergy/" target="_blank" rel="noopener">TNGECL</a>) and the execution of power purchase agreements (PPAs) by Tamil Nadu Power Distribution Corporation (<a href="https://www.tnpdcl.org/en/tnpdcl/" target="_blank" rel="noopener">TNPDCL</a>) with the seven successful bidders for a period of 25 years.</p>
<p>However, it rejected the petitioners’ request to make payment based on gross generation. Instead, the Commission directed that payment for power procured must be based on net energy delivered after accounting for applicable line losses.</p>
<p><strong>Background </strong></p>
<p>TNGECL and TNPDCL had filed the petition seeking approval to adopt tariffs offered by seven farmer-bidders for proposed solar power projects with a combined capacity of 12 MW under Component A of the PM-KUSUM program.</p>
<p>Earlier, TNGECL had been <a href="https://www.mercomindia.com/tamil-nadu-electricity-regulator-approves-tngecls-420-mw-kusum-tender" target="_blank" rel="noopener">permitted</a> to float a tender to procure 420 MW of solar power under PM-KUSUM Component-A.</p>
<p>Sixteen bidders participated in the tender. Their bids were opened in February this year, and after negotiation, four bidders were placed at ₹3.02 (~$0.0315)/kWh and three at ₹3.09 (~$0.0323)/kWh.</p>
<p>The petitioners argued that the discovered rates were reasonable because they were below the ceiling tariff of ₹3.10 (~$0.0324)/kWh. They also submitted that the bidders were from different geographical locations and substations, and that accepting the rates would encourage distribution-level solarization and improve farmers’ livelihoods.</p>
<p>They requested that payment be made for gross generation if the solar project is interconnected to existing 11 kV or 22 kV feeders, and for generation recorded at the substation end if connected to a substation.</p>
<p><strong>Commission’s Analysis </strong></p>
<p>The Commission noted that TNGECL had floated the tender in line with the Commission’s earlier approval and that the procurement was intended for renewable power generators with a capacity of 1-2 MW.</p>
<p>The Commission found that the tender process was consistent with the Ministry of New and Renewable Energy’s (MNRE) guidelines, which envisage decentralized renewable energy projects near substations to facilitate distributed renewable generation.</p>
<p>On bid evaluation, the Commission observed that the disqualification of certain bidders was in accordance with the approved tender conditions.</p>
<p>The Commission concluded that the discovered tariffs were below the ceiling tariff and were determined through a transparent bidding process.</p>
<p>However, on the issue of gross generation payment, the Commission directed payment based on net energy delivered after accounting for line losses since an earlier order had already approved the deduction of applicable line losses.</p>
<p>It also directed that solar modules used in the projects conform to MNRE’s Approved List of Models and Manufacturers, and that evacuation infrastructure and approvals be established on time.</p>
<p>In March this year, TNERC <a href="https://www.mercomindia.com/tnerc-adopts-tariff-for-two-15-mw-solar-plus-45-mwh-battery-storage-projects" target="_blank" rel="noopener">approved</a> a tariff of ₹4.47 (~$0.048)/kWh for two 15 MW solar projects integrated with 45 MWh battery energy storage systems in the Karur and Thiruvarur districts.</p>
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Tamil Nadu Approves Procurement of 12 MW of Solar Power Under PM KUSUM


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					</table><p>The Tamil Nadu Electricity Regulatory Commission (<a href="https://www.tnerc.tn.gov.in/" target="_blank" rel="noopener">TNERC</a>) has allowed the Tamil Nadu Green Energy Corporation (<a href="https://www.tngecl.org/en/greenenergy/" target="_blank" rel="noopener">TNGECL</a>) and the Tamil Nadu Power Distribution Corporation (<a href="https://www.tnpdcl.org/en/tnpdcl/" target="_blank" rel="noopener">TNPDCL</a>) to initiate the tendering process for the development of a 1 GW closed-loop off-river pumped storage project at Velimalai in Kanyakumari district.</p>
<p>The Commission allowed a few deviations from the Ministry of Power’s tariff-based bidding guidelines for procuring storage capacity from pumped storage projects.</p>
<p>TNERC ruled that these deviations are project-specific and applicable only to the Velimalai project, while future procurements must strictly follow the bidding guidelines.</p>
<p>The Commission directed the petitioners to submit revised bidding documents, including the pumped storage purchase agreement (PSPA), transmission implementation agreements, and other related documents for approval after the pre-bid stage.</p>
<p>It also asked the petitioners to submit a commitment from the Tamil Nadu Transmission Corporation (<a href="https://www.tantransco.org/en/tantransco/" target="_blank" rel="noopener">TANTRANSCO</a>) to complete the substation-related works in line with the project timelines.</p>
<p><strong>Background </strong></p>
<p>TNGECL and TNPDCL filed a petition seeking approval to float the tender for the Velimalai pumped storage project, which is part of Tamil Nadu’s strategy to strengthen grid stability and integrate greater renewable energy.</p>
<p>The petitioners contended that certain deviations from the Ministry of Power’s bidding guidelines were necessary to effectively implement the procurement process and attract a wider pool of developers.</p>
<p>TNPDCL proposed using the project to achieve multiple operational and commercial objectives, including storing surplus power during off-peak hours and scheduling discharges during peak-demand periods, providing ancillary services for grid stability, and reducing liabilities under the deviation settlement mechanism.</p>
<p>Among the key proposals were modifications to land arrangements, financial eligibility, equity lock-in requirements, bid security framework, and the participation of foreign investment funds.</p>
<p>The petitioners stated that these changes would improve bankability, investor participation, and financing flexibility.</p>
<p>They also submitted that similar provisions have already been adopted in other pumped storage tenders, including the one <a href="https://www.mercomindia.com/maharashtra-tender-1-gw-pumped-hydro-energy-storage" target="_blank" rel="noopener">issued</a> by Maharashtra State Electricity Distribution Company in March 2024.</p>
<p><strong>Commission’s Analysis </strong></p>
<p>TNERC observed that the proposed pumped storage project is important to grid reliability and the integration of renewable energy, particularly as Tamil Nadu expands its renewable energy capacity.</p>
<p>It noted that limited deviations from the bidding guidelines may be permitted, provided they remain consistent with the objectives of transparency and competition.</p>
<p>TNERC observed that the tender guidelines should permit participation by foreign investment funds. The eligibility should be expanded to permit companies, including foreign companies, alternative investment funds, and consortia, to participate as bidders, aligning with the Ministry of Power’s 100% foreign direct investment allowance for power generation under the automatic route.</p>
<p>It emphasized that the deviations would broaden the bidder pool, improve financing prospects, and enable smoother project implementation.</p>
<p>However, the Commission noted that national security provisions, financial due diligence, and regulatory alignment must be maintained, especially in cases involving foreign investment participation.</p>
<p>Recently, TNERC <a href="https://www.mercomindia.com/tamil-nadu-secures-regulatory-approval-for-270-mw-fdre-procurement" target="_blank" rel="noopener">approved</a> the procurement of 270 MW of firm and dispatchable renewable energy by TNPDCL from Solar Energy Corporation of India.</p>
<p>In 2024, Tamil Nadu <a href="https://www.mercomindia.com/tamil-nadu-pumped-storage-completion" target="_blank" rel="noopener">issued</a> the ‘Pumped Storage Policy’ to harness the potential of pumped storage to optimize renewable energy utilization, promote sustainable energy growth, and attract public and private investments. The policy has set timelines for various stages of execution, with seven years allowed for the project’s commissioning.</p>
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TNERC Approves Bidding Process for 1 GW Velimalai Pumped Storage Project


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					</table><p>The Tamil Nadu Electricity Regulatory Commission (<a href="https://www.tnerc.tn.gov.in/" target="_blank" rel="noopener">TNERC</a>) has approved a tariff of ₹4.47 (~$0.048)/kWh for two 15 MW solar projects integrated with 45 MWh battery energy storage systems in the Karur and Thiruvarur districts.</p>
<p>The projects will be implemented under a 25-year power purchase agreement (PPA).</p>
<p>For the Karur project, the Commission allowed Tamil Nadu Green Energy Corporation (<a href="https://www.tngecl.org/en/greenenergy/" target="_blank" rel="noopener">TNGECL</a>) to issue a letter of award to <a href="https://evolveenergygroup.com/" target="_blank" rel="noopener">Evolve Green Energies</a>, the L1 bidder.</p>
<p>For the Thiruvarur project, TNERC permitted TNGECL to award the contract to <a href="https://bvgindia.com/" target="_blank" rel="noopener">BVG India</a>.</p>
<p>The Commission allowed TNGECL to execute the PPA with the developers and a power sale agreement (PSA) with Tamil Nadu Power Distribution Corporation (<a href="https://www.tnpdcl.org/en/tnpdcl/" target="_blank" rel="noopener">TNPDCL</a>), with a trade margin of ₹0.03 (~$0.0003)/kWh.</p>
<p>At the same time, the regulator directed that during any battery storage outage or battery replacement period, only the solar tariff component will be payable, instead of the full composite tariff.</p>
<p><strong>Background </strong></p>
<p>The petitions were filed by TNGECL and TNPDCL seeking approval of tariffs discovered through competitive bidding for two solar-plus-storage projects.</p>
<p>The tender for the Karur project was <a href="https://www.mercomindia.com/tamil-nadu-15-mw-solar-45-mwh-bess-project-karur" target="_blank" rel="noopener">floated</a> in November last year. The tender for the Thiruvarur project was also <a href="https://www.mercomindia.com/tngecl-invites-bids-for-15-mw-solar-with-45-mwh-bess-project-in-thiruvarur" target="_blank" rel="noopener">floated</a> in the same month.</p>
<p>Each project consists of a 15 MW solar plant integrated with a 15 MW/45 MWh battery energy storage system, capable of supplying stored electricity for three hours during peak demand periods.</p>
<p>The projects aim to supply firm renewable energy during evening peak hours, reduce reliance on expensive short-term power purchases, and enhance grid stability.</p>
<p>The bidding process was conducted in accordance with the Ministry of Power’s guidelines for renewable energy with energy storage systems.</p>
<p>According to the petitioners, the discovered tariff of ₹4.47 (~$0.048)/kWh was significantly lower than the estimated levelized tariff of around ₹6.49 (~$0.071)/kWh for similar solar-plus-storage projects.</p>
<p>The tariff structure was designed as a single composite energy tariff without separate capacity or availability charges, ensuring that payments would be linked strictly to actual energy delivered.</p>
<p>The petitioners added that the projects include certain performance obligations, such as:</p>
<ul>
<li>The minimum annual capacity utilization factor (CUF) of the solar project should be 21%. Any solar generation exceeding the 21% CUF limit in a particular month may be payable at 75% of the latest discovered rate price for solar energy or 75% of the weighted average of the solar tariff discovered during the financial year of that period, whichever is lower.</li>
<li>The developer should ensure that the battery storage system discharges at least 95% of the contracted 45 MWh monthly peak energy obligation during peak hours, with 95% availability.</li>
<li>The minimum round-trip efficiency for the storage system should be 85%. If, in any month within an operational year, the developer fails to achieve a minimum round-trip efficiency of 85%, the developer will be liable for damages.</li>
</ul>
<p><strong>Commission’s Analysis </strong></p>
<p>TNERC acknowledged that integrating battery storage with solar generation can provide peak power support, improve grid flexibility, and reduce reliance on costly short-term power procurement.</p>
<p>However, the Commission expressed concerns about composite tariff structures, noting that they could potentially expose distribution utilities to financial risks if storage performance deteriorates or if payments are not properly linked to actual system benefits.</p>
<p>To address these concerns, TNERC imposed several safeguards, including:</p>
<ul>
<li>Limiting the DC: AC capacity ratio of solar modules to 1.3:1 to prevent excessive generation incentives. The AC capacity should be defined as the lower of the inverter nameplate capacity or the contracted capacity (15MW).</li>
<li>Requiring developers to maintain 21% annual CUF and minimum peak discharge obligations.</li>
<li>Mandating a minimum 85% round-trip efficiency for the battery storage system.</li>
<li>Restricting tariff payments to solar benchmark rates during battery storage outages to prevent gaming of the composite tariff structure.</li>
</ul>
<p>The Commission emphasized that the metering arrangements for the project should comply with the Central Electricity Authority regulations governing the installation and operation of meters, as well as the provisions of the Tamil Nadu Grid Code.</p>
<p>It directed TNGECL and TNPDCL to ensure that the metering scheme, real-time data acquisition systems, and energy accounting procedures are designed to enable accurate monitoring of solar generation, storage charging, and discharge during peak periods, and that they are implemented in accordance with the applicable regulatory framework.</p>
<p>Further, TNERC adopted a tariff of ₹4.47 (~$0.048)/kWh for the procurement of power from two 15 MW solar projects with 45 MWh battery energy storage systems in the Karur and Thiruvarur districts.</p>
<p>Recently, TNERC <a href="https://www.mercomindia.com/tnerc-adopts-tariff-for-375-mw-1500-mwh-battery-energy-storage-projects" target="_blank" rel="noopener">adopted</a> tariffs of ₹315,000 (~$3,459)/MW/month and ₹316,000 (~$3,470)/MW per month for 375 MW/1,500 MWh battery energy storage projects.</p>
<p>Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to stay informed about critical updates from the renewable industry.</p>


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