The Tamil Nadu Electricity Regulatory Commission (TNERC) has permitted the Tamil Nadu Transmission Corporation (TANTRANSCO) to lease portions of its substation land to private developers to install battery energy storage systems (BESS) at a nominal charge of ₹1 (~$0.0113)/project/annum for 15 years.

Background

TANTRANSCO approached the Commission seeking approval to provide the right of use of its substation land to BESS developers. It proposed that land at six substations be leased for a token charge of ₹1(~$0.0113)/project/annum. The proposal aimed to establish 1,000 MWh of energy storage capacity under the state component of the Viability Gap Funding program, routed through the Tamil Nadu Green Energy Corporation (TNGECL).

The petitioner argued that Tamil Nadu has been a leader in renewable energy with a total capacity of nearly 24 GW from solar, wind, biomass, and cogeneration projects. However, the variability of renewable generation places considerable stress on the grid. Ramping up and ramping down thermal generation to balance this variability has created operational challenges. Energy storage systems are therefore vital to ensure stable grid operations and to enable further integration of renewable energy.

The petitioner highlighted that pumped storage projects are already being promoted, but these projects require long lead times for completion. In the meantime, BESS provides an immediate solution to address fluctuations. The Union government has introduced a program to develop 4 GWh of BESS. Tamil Nadu has been allocated 1 GWh under this initiative.

TANTRANSCO will execute five projects of 100 MW/200 MWh each in substations at Thennampatty, Anuppankulam, Ottapidaram, Vellalaviduthi, Kayathar, and Karaikudi. Only surplus land not needed for transmission would be leased, ensuring that core transmission activities remain unaffected.

It maintained that leasing the land at a nominal rent serves the public interest by enabling cost-effective integration of renewable energy, while not generating profits for TANTRANSCO.

Commission’s Analysis

In its findings, the Commission confirmed that TANTRANSCO’s proposal involves leasing unused substation land that does not interfere with licensed transmission operations. The arrangement falls within the scope of Sections 17 and 41 of the Electricity Act, which permit a licensee to undertake other business with the prior approval of the Commission, provided that transmission assets are not encumbered.

Since the lease would generate no significant revenue and the benefit accrues entirely to electricity consumers and the power system, the Commission considered the petition to be in the public interest.

The Commission imposed certain conditions while approving. TANTRANSCO must conduct grid connectivity and feasibility studies before execution. Lease agreements must be signed for 15 years, with clear provisions for the return of the land to its original state. The projects must comply with state and central policies and all regulatory orders issued by the Commission.

Developers must also adhere to environmental and safety standards. It was further directed that the projects must not hinder transmission operations or the expansion of substations. Necessary approvals from the Government of Tamil Nadu must be obtained before entering into agreements with developers.

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