Tender to buy 1,000 MW will cut costs: Tangedco

CHENNAI: Tangedco, the generator and distributor of electricity in the State, has decided to buy 1,000 MW more electricity specifically for the evenings, through a 5-year tender instead of costly intraday purchases, to meet the rising power demand, which has seen a spike since last year.

The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved Tangedco’s proposal to move away from high-price day-ahead market power purchases to meet evening peak demand and switch over to buying power from a medium-term power procurement tender, starting from September 1, 2024, for five years, which is set to ease its budget to a great extent.

Meanwhile, TNERC has shared suggestions with Tangedco to consider power generation from hydro, gas, and battery energy storage systems and to increase procurement hours.

Tangedco has decided to opt for a medium-term power purchase of 1,000 MW for the evening peak demand as the power demand consistently exceeds 16,000 MW since 2023 on all days except during the rainy season and holidays. Due to the high peak power demand, the state has been facing a deficit of 4,000 MW during the evening hours, leading to load shedding. Tangedco has been forced to resort to intraday power purchases through a high-price day-ahead market (DAM) at the rate of Rs 14 to Rs. 20 per unit, increasing the financial burden of the utility.

Tangedco has also submitted the forecast from the 20th Electric Power Survey, which predicts a deficit ranging from 2,799 MW in 2024-25 to 8,608 MW in 2029-30 during the evening peak demand.

Tangedco claimed that the deficit is expected due to the anticipated delay in the commissioning of the ongoing 1,320 MW Ennore SEZ and 1,320 MW Udangudi thermal power projects, and the 1,000 MW Kudankulam Stage 3 Nuclear Power Plant.

“Hence, procurement of thermal power during peak hours through the tender process will be more economical than purchasing peak power through Power Exchanges,” the utility stated. Approving Tangedco’s proposal to float tenders to purchase 1,000 MW of power for five years, the TNERC has suggested it to float it for extended hours from 4 pm to 2 am to attract more bidders with an assured purchase for at least six hours.

The commission has also suggested that Tangedco invite bids from gas-based and hydro plants and consider the round-the-clock power supply option instead of peak power to make the tender more attractive to bidders. The surplus power available from the generator can be sold through the real-time market to reduce the power purchase cost, the regulatory body said.

“Similarly, tenders can be called for from developers of Battery Energy Storage Systems (BESS) by supplying power to the developers during a surplus period and by discharging during the peak period,” the commission suggested.