Tamil Nadu Advances Major Battery Storage Initiative with 1,500 MWh Project
Chennai: The state of Tamil Nadu is on the verge of a significant leap in renewable energy infrastructure, as the Tamil Nadu Green Energy Corporation Ltd (TNGECL) is poised to finalize the winning bidder and issue a letter of authorisation (LOA) for a 1,500 megawatt hour (MWh) battery energy storage system (BESS). This move underscores the state's commitment to enhancing grid reliability and reducing power costs through advanced energy solutions.
Budget Announcement and Expedited Process
Finance minister Thanam Thennarasu highlighted in the recent interim budget that the tender for the BESS project is in its final stages. TNGECL officials have accelerated the process due to two critical factors: the impending model code of conduct (MCC), which restricts LOA issuance once announced, and the approaching deadline to avail viability gap funding (VGF) for BESS projects. This urgency reflects the strategic importance of timely implementation to secure financial support and avoid regulatory hurdles.
Union Government Support and Funding Allocation
The Union government is playing a pivotal role by providing 40% of the project cost as VGF, aimed at encouraging more investors to enter the battery storage market. In the second phase of this initiative, the Union power ministry has allocated ₹5,400 crore as viability gap funding to 15 states, targeting the installation of 30 gigawatts of BESS. Tamil Nadu's share includes the 1,500 MWh project, positioning it as a key beneficiary in this nationwide push for energy storage capacity.
Previous Projects and Development Stages
In the first phase, TNGECL awarded tenders for a 1,000 MWh BESS project to multiple entities:
- NLC India Renewables Ltd (NIRL) for 500 MWh
- Bondada Engineering Ltd for 400 MWh
- Oriana Power for 100 MWh
These projects are currently in various stages of development, laying the groundwork for the expanded 1,500 MWh system. The cumulative effort highlights Tamil Nadu's progressive approach to integrating renewable energy sources into its power grid.
Operational Benefits and Grid Impact
The BESS project will be strategically located in areas with high renewable power production, such as solar and wind farms. It will store excess green energy during peak generation times and release it during non-solar hours, such as evenings, to alleviate grid stress and reduce power purchase costs. Once fully operational, all BESS projects in Tamil Nadu are expected to store approximately 2.25 million units of power, providing up to four hours of supply during peak demand periods. This capability is crucial for maintaining a stable and cost-effective electricity supply across the state.
Regulatory Steps and Future Outlook
Following the issuance of the LOA, both the developer and TNGECL will approach the Tamil Nadu Electricity Regulatory Commission (TNERC) to finalize storage rates, ensuring a transparent and regulated framework for the project's implementation. This step is essential for setting fair pricing and operational guidelines, further solidifying the project's viability and long-term success in Tamil Nadu's energy landscape.
