Tamil Nadu Introduces BESS Policy Targeting 2.5 GW/10 GWh Storage Capacity

Tamil Nadu has released its Battery Energy Storage Systems (BESS) Policy, 2026, dated October 28, targeting at least 2.5 GW/10 GWh of storage capacity during its three-year validity. The initiative marks the state's first phase of structured energy storage deployment, backed by a 10-year waiver of transmission and wheeling charges subject to approval by the Tamil Nadu Electricity Regulatory Commission (TNERC).

Under the policy, the 2.5 GW figure denotes the power capacity for charging and discharging, while 10 GWh represents the total energy storage volume. The framework mandates new solar and solar-hybrid projects of 1 MW and above to install BESS with a discharge power equivalent to at least 10 percent of the solar project's installed capacity, maintaining a four-hour discharge duration. This rule applies to applications submitted on or after the notification date or projects commissioned on or after April 1, 2027.

New renewable energy pooling substations are similarly required to provide standalone BESS capacity equal to at least 10 percent of their sanctioned capacity, with a four-hour discharge window. Existing pooling substations must install storage equivalent to 5 percent of their sanctioned capacity by FY2027-28 and an additional 5 percent by FY2028-29, dependent on technical feasibility and grid connectivity approvals. Existing solar and wind projects of 1 MW and above are also encouraged to adopt BESS for renewable integration and peak management.

Tamil Nadu Power Distribution Corporation Limited (TNPDCL) will procure 2,500 MW/10,000 MWh of BESS capacity through competitive bidding, with final prices subject to TNERC approval. TNPDCL will supply charging energy for these projects, preferably during solar hours between 10 am and 2 pm, directed by the State Load Despatch Centre (SLDC). Eligible BESS projects commissioned during the policy period can receive a 100 percent waiver on transmission and wheeling charges for 10 years, capped at a cumulative 10 GWh of eligible capacity. To qualify, energy discharged during non-solar hours must be consumed within Tamil Nadu.

The policy permits standalone storage connected to transmission, distribution, or private networks, as well as co-located storage with renewable energy projects. Co-located BESS power capacity is capped at 100 percent of the sanctioned renewable energy capacity, and discharge must occur through the same point of interconnection. Tamil Nadu currently reports a renewable energy capacity of approximately 29.8 GW, consisting of around 14.5 GW of solar and 11.6 GW of wind.

Several operational and financial aspects of the policy require further clarity. The scope of financial incentives remains limited in description, primarily detailing the transmission and wheeling charge waivers without specifying additional financial mechanisms. Furthermore, the treatment of four existing BESS projects under development—representing a combined capacity of 905 MW/2,590 MWh—remains ambiguous regarding whether they count toward the overall 2.5 GW/10 GWh target. Analysts also note that Tamil Nadu's four-hour discharge mandate could introduce higher upfront costs for developers compared to guidelines issued by the Central Electricity Authority.

"Tamil Nadu's new BESS policy establishes a foundational framework for integrating renewable energy storage into the state's power grid. While the mandatory storage requirements and procurement plans create clear pathways for infrastructure development, developers and investors will need to closely monitor regulatory clarifications regarding commercial terms, merchant storage participation, and upfront capital requirements to assess project feasibility accurately." — Dr. Shishir Gupta, Founder & CEO, StartupLanes