Driving Sustainable Energy Transformation: Tamil Nadu's Journey

Sandhya Sundararagavan, Harish Palani and Sripathi Anirudh R

Tamil Nadu's (TN) journey towards clean energy transition over the last few years has been encouraging and is poised to play a pivotal role in shaping India's renewable energy (RE) landscape. The share of RE capacity in the state surged from 45% to 54% between 2019 and 2023, with solar capacity doubling from 9% to 18%, according to data derived from the Central Electricity Authority and Ministry of New and Renewable Energy. Notably, the share of RE generation increased from 14% to 25.6% on an average during this period. As of January 2024, the state boasts the fourth-highest installed solar capacity at 7,426 MW and second-highest installed wind capacity at 10,441 MW. Going forward, TN has the ambitious goal to elevate its installed RE capacity to 75%, coupled with a target to increase its RE generation share to 50% by 2030.

This target surpasses the current Renewable Energy Purchase Obligation – a mandate by state electricity regulatory commissions to source a minimum percentage of electricity consumption from renewable energy – and is estimated to reach approximately 43.3% by 2030. To achieve this, TN has outlined comprehensive plans in the TN Energy Policy Note 2023-24, including the addition of 20 GW of solar capacity, 14 GW of pumped hydro storage, 10 GW of battery storage and the solarization of 1,685 agriculture feeders by 2026.

Over the last five years, there have been several policy changes which could potentially expedite the state’s energy transition. A conducive policy framework, exemplified by policies like the TN Solar Policy 2019, the Tamil Nadu EV Policy 2023, Grid Interactive Solar Energy Generating System Order 2021, and the TN Renewable Purchase Obligation 2023, provides a clear roadmap for RE integration. With abundant solar insolation and wind resources totaling 141 GW, the state leverages its immense RE potential, showcasing a commitment reflected in substantial investments in wind farms and solar parks. Moreover, technological advancements, including the formulation of a green hydrogen policy and ongoing tenders for 4 GW of offshore wind energy projects, drive TN's energy transition.

The state has also launched the Tamil Nadu Climate Change Mission (TNCCM) which includes facilitating the transition towards RE and resilient buildings as one of its focus areas. Implementation of robust energy efficiency measures across sectors such as industry, buildings and agriculture can significantly reduce overall energy demand. Enforcing initiatives like the Tamil Nadu Energy Conservation Building Code Rules 2022 (TNECBC) for the buildings sector and electrification of industrial heating applications offers substantial avenues for decarbonizing industries. Similarly, prioritizing the electrification of public transportation and solarization of feeders presents viable strategies for the transportation and agricultural sectors respectively. By fostering adoption of decarbonization strategies, Tamil Nadu can reduce its reliance on fossil fuels, minimize energy costs and contribute to a cleaner environment.

Like all previous transitions, the state’s transition is also likely to face hurdles in realizing its sustainable energy goals. The escalating peak power demand, which reached 19,387 MW in April 2023, poses a significant challenge in balancing supply and demand while greening the generation mix. Issues related to line losses, grid stability and the availability of robust grid infrastructure may add to the previously described supply-demand mismatch situations.

Financing remains a challenge, compounded by Tamil Nadu Generation and Distribution Company Limited’s (TANGEDCO) legacy dues of INR 89,375 Crores as of FY22, necessitating innovative financing strategies and investment mobilization. The recent announcement about establishment of the Tamil Nadu Green Energy Corporation Limited (TNGECL) signals a significant push for green energy and is expected to expedite the state's energy transition plans by facilitating green project funding and improving financial health of state electric utility. Further, TNGECL is expected to streamline clearance processes, explore energy storage solutions, and foster technology partnerships and skill development.

Implementation challenges persist with decentralized RE facing limitations due to factors such as limited financing options and prolonged regulatory timelines for clearances. Balancing land use demands and addressing environmental and social impacts are crucial considerations, especially for newer technologies like offshore wind.

To capitalize on opportunities and achieve its goal of a 50% RE generation share by 2030, TN must prioritize key focus areas. A holistic RE policy that aligns with existing state policies, India’s national commitments towards achieving Net Zero by 2070 and international goals will foster collaboration and support broader decarbonization efforts. For decentralized RE, a robust regulatory framework is essential to streamline approval processes, expedite project development, and ensure predictability through clear and consistent long-term policy commitments. Timely annual performance reviews and tariff revisions are crucial for strengthening the financials of the utility.

Moreover, Integrated Resource Planning (IRP) should be prioritized to ensure reliable energy supply at the lowest overall system cost, considering the state's expanding energy needs and the integration of RE into the grid. Smart digital technologies like smart meters are essential for effective demand-side management measures and time-of-day implementation. Embracing decarbonization strategies, including the implementation of energy efficiency measures across sectors and the electrification of industries, buildings, public transportation and agriculture, will significantly contribute to reducing overall energy demand and reliance on fossil fuels.

Capacity building and awareness among stakeholders through regular training programs and knowledge-sharing initiatives will equip them with the skills and knowledge needed for effective energy management. Collaboration and partnerships between various stakeholders will tap into diverse expertise, facilitating the development of innovative solutions for a sustainable energy future in the state. With concerted efforts from policymakers, industry stakeholders and civil society organizations, TN has the potential to emerge as a leader in renewable energy deployment, contributing significantly to India's broader sustainability goals.

WRI India, as part of The Sustainable Energy Transformation (SET) initiative (a consortium that includes WRI India, Auroville Consulting (AVC) and Citizen consumer and civic Action Group (CAG)) has supported TN's subnational energy transition efforts for the past five years. This initiative focuses on supporting implementation of RE policies, conducting vital research and analysis, building capacities of stakeholders and devising energy transition strategies to facilitate a clean energy future in the state.

Sandhya Sundararagavan is Lead, Energy Program at WRI India. Harish Palani, is Senior Research Specialist, and Sripathi Anirudh is Senior Research Associate, WRI India. All views expressed by the authors are personal.