Tamil Nadu Regulator Allows the Use of Battery Storage for Captive Solar Project

Tamil Nadu Electricity Regulatory Commission (TNERC) has allowed Dollar Industries to set up a 2 MW solar project with a battery energy storage system (BESS) for captive use.

Dollar Industries had filed a petition seeking permission to set up two solar projects of 2 MW capacity with BESS for captive use. The petitioner argued the BESS would allow the petitioner to use solar energy during day and night hours as per the solar tariff order of the Commission.


The company applied to TANGEDCO to establish a 1 MW solar project for captive use. Their application was approved and registered after paying the required fees of ₹646,809 (~$7,909). TANGEDCO then instructed the company to pay the remaining security deposit of ₹50,000 (~$611), which was promptly paid.

TANGEDCO then conducted a load flow study and determined that Dollar Industries’ 1 MW solar project could be connected to the existing 22 kV feeder at Minukkampatty 110/22 kV substation.

The company again applied to TANGEDCO to establish another new 1 MW solar project. Their application was approved and registered after paying the required fees of ₹654,108 (~$7,998). Another load flow study was conducted, and it was considered that the additional 1 MW solar project could be interfaced through the same existing 22 kV feeder.

Dollar Industries then requested TANGEDCO to merge the two solar projects and to allow the establishment of a 4 MWh BESS at the same site. The company intends to use the BESS to store solar power generated during peak and night hours. The company also claimed to be the first generator in Tamil Nadu to establish a solar project with battery storage.

TANGEDCO sent a letter to Dollar Industries, stating that they must commission and synchronize the 2 MW solar project along with the BESS within 12 months from the date of the letter. Failing this, the entire security deposit of ₹2 million (~$24,455) paid by Dollar Industries will be forfeited, and the application will be canceled.

TANGEDCO directed the company to obtain prior permission from the Commission to adjust solar energy generated in the project during the day and stored in the BESS for peak hour and night hour consumption. Dollar Industries was asked to design the BESS so that it should not draw supply from the grid.

Commission Analysis

While applauding the project for the first of its kind in the state, the Commission highlighted that Electricity Act defines “generating station” and “power system” broadly enough to include energy storage systems like BESS.

The Commission also noted that the Ministry of Power confirmed that energy storage systems, including BESS, are part of the power system as defined by the Electricity Act. As a result, BESS is legally recognized as a power system and can generate electricity during discharging with time deferral.

The Commission stated that the project would benefit both the petitioner, who can use stored power during peak and night hours and TANGEDCO, who doesn’t have to buy expensive power from the market during peak hours. The Commission also stated that storing solar power during the day and using it during peak and night hours benefits both parties and helps balance the grid.

The Commission permitted Dollar Industries to install the BESS and the 2 MW solar project. The Commission stated that Dollar Industries must comply with all regulations and orders of the Commission and maintain current harmonics.

The Commission directed TANGEDCO to communicate technical, commercial, operation, and maintenance conditions, metering, protection, and billing mechanisms to Dollar Industries. It also asked the two parties to enter into a bilateral agreement with all these conditions mentioned.

Mercom has earlier reported that commercial and industrial (C&I) consumers in the state are considering switching to solar open access projects under captive and group captive mode due to across-the-board tariff hikes by state-owned distribution companies. The multi-year tariff order raised conventional power costs by 6-18% for C&I consumers. The tariff order permitted an annual increase in tariffs.

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