Tamil Nadu Proposes Deviation Settlement Mechanism Rules for Solar and Wind Projects

The regulations will apply to wind and solar projects except for rooftop projects less than 1 MW

September 14, 2023


The Tamil Nadu Electricity Regulatory Commission (TNERC) has issued the draft forecasting, scheduling, and deviation settlement regulations 2023, allowing up to 10% deviation for solar power projects and 15% for wind power projects without penalties.

The regulations will apply to all wind and solar energy generators (excluding rooftop solar power projects of capacity less than 1 MW) in Tamil Nadu connected to the intrastate transmission system or distribution system, including those connected through pooling substations, and using the power generated for self-consumption or sale within or outside the state.

The proposed regulations aim to facilitate grid integration of wind and solar energy generated in Tamil Nadu while maintaining grid stability and security as envisaged under the State Grid Code and the Electricity Act 2003 through forecasting, scheduling, and a mechanism for the settlement of deviations by such generators.

Deviation Settlement for Intrastate Transactions

When it comes to selling or using power generated from wind or solar sources in Tamil Nadu, if the amount of power generated differs from the scheduled generation, the generator will be responsible for paying a deviation charge for the surplus or deficit. This charge will be deposited into the State Deviation Pool Account (Solar and Wind) through the state load despatch center (SLDC), as detailed in the provided tables:


TNERC DSM Solar Updated-1


TNERC DSM Wind Updated-2

The concerned generators must undertake the settlement of deviation charges with the SLDC.

The maximum allowable deviation charges for wind or solar generators, based on deviations in a given financial year, will be capped at ₹0.05 (~$0.0006)/kWh multiplied by either the total annual generation at the respective pooling substation or the total generated units in statewide aggregation.

The forecasting service charges, calculated based on the generating capacity of the projects and applicable taxes approved by the generators and quality coordinating agencies (QCA), must be paid to the QCAs through the SLDCs

Deviations caused by forced shutdowns or unusual weather conditions such as cyclones, heavy rainfall, floods, or strong winds, provided they are communicated to the SLDC by the QCA at least six hours in advance, will not be subject to deviation charges.

Deviation Settlement for Interstate Transactions

According to the proposed regulations, when selling power outside the state, wind or solar energy generators connected to the intrastate transmission system or distribution network in Tamil Nadu will have to settle their transactions based on their scheduled generation.

Interstate transactions at a pooling substation will only be allowed if the generator is connected through a distinct feeder or metering setup.

For wind or solar generators linked to the intrastate transmission network and exporting power beyond Tamil Nadu, any deviation charges for under-injection should adhere to the regulations outlined in the Central Electricity Regulatory Commission’s (Deviation Settlement Mechanism and Related Matters) Regulations of 2022.

Forecasting and Scheduling Code

The QCA must represent the generators and comply with the requirements of forecasting and scheduling separately.

A single QCA, chosen by most wind and solar generators, will serve all respective generators individually within the state. The terms and conditions for appointing this single QCA should be established through a mutual agreement between the generators and them.

An individual generator connected to a substation designated as a pooling substation can either act as its own QCA or appoint a separate entity as its QCA. However, multiple QCAs for a single pooling substation will not be allowed.

Under the proposed regulations, wind or solar generators at a pooling substation with a combined capacity of up to 25 MW may consolidate their forecasts and scheduling through the QCA associated with the nearest pooling substation.

Every QCA should be registered with the SLDC, along with the authorization of the majority of wind or solar generators.

The Forecasting and Scheduling Code outlines the procedure for scheduling wind and solar generators connected to the intrastate transmission network for the day ahead. It also details the periodic revisions of these schedules, typically done on a one-and-a-half-hourly basis and the handling of any deviations from these predetermined schedules.

The QCA will assume responsibility for tasks such as aggregating the scheduled generation, conducting meter readings, collecting data, and communicating this information.

The agreement between the QCA and the wind or solar generators will have a minimum term duration of two years. In the absence of a new arrangement, the existing QCA will continue its services for an additional period of up to one year.

The SLDC will also engage forecasting agencies to forecast the expected wind and solar energy generation that will be injected into the intrastate transmission network at each location. This will help the SLDC plan more effectively for the balancing resources required to ensure grid security and reliability.

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If the QCA has difficulty aggregating wind or solar generation for the entire state, they may provide schedules for each pooling station. In such cases, the deviation charges will be calculated pooling sub-station-wise.

No wind or solar energy generation will be despatched by the SLDC without schedule by the QCA on behalf of the generators.


Each pooling substation or generator must have an energy meter that can accurately record energy consumption per the time blocks specified in the metering regulations established by the Central Electricity Authority (CEA).

The data collected from existing automated meter reading (AMR) systems maintained by SLDC will be made accessible to the single QCA. The designated QCA will be responsible for independently managing the capturing, transmitting, and analyzing the data provided, ensuring that it does not disrupt their own operational processes.

The SLDC must provide generation readings for each 15-minute time block on a monthly basis to QCA. The report must contain information about the meter’s data from AMR.

The deviation charges will be calculated by the SLDC based on data available with them in 15 minutes block-wise.

Deviation Accounting

The SLDC will calculate the absolute error, which is the difference between the scheduled and actual injected energy, for statewide aggregation and each pooling substation. Based on these calculations, the SLDC will determine the amounts to be paid or received in relation to the deviation charge.

The deviation charges, whether payable or receivable for the entire state at its periphery, will be computed by the SLDC.

Additionally, the SLDC is tasked with assessing the impact of deviations in wind and solar energy generation and how they contribute to the deviation charge at the state periphery. The SLDC will maintain a separate State Deviation Pool Account for intrastate and interstate transactions.

Payment Mechanism

The generators should either pay the deviation charges directly to the SLDC online or through the billing of the Tamil Nadu Generation and Distribution Corporation’s (TANGEDCO) service connections of the captive consumers or third-party consumers.

The SLDC should prepare the bill for the actual deviation charges for each generator on or before the 15th of every month.

If there is a delay in settling the deviation charges and any associated interest extending beyond 12 days from the date when the statement of charges for deviations was issued, the recipients of these payments, whether QCAs or generators, will be compensated from the funds existing in the State Deviation Pool Account.

In February this year, CERC issued new guidelines to supplement the Deviation Settlement Mechanism (DSM) Regulations 2022 to maintain grid security. The Commission has added a new category of wind-solar generators and introduced charges for DSM.

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