The story so far: The Tamil Nadu Power Distribution Corporation Limited (TNPDCL) recently signed a power purchase agreement at over ₹30 per unit. This has been criticised by various Opposition parties, which have condemned the rate the State has to pay, drawing comparisons with other States that are paying much lower rates for power purchase agreements.

The government has clarified that due to the high demand for electricity in the State this time, thanks to a prolonged summer-like situation, it has had to opt for such an agreement. Energy Resources Minister C.T.R. Nirmal Kumar has claimed that at the moment, only gas power is available for purchase, and attributed the high cost of the power purchase agreement to the same.

What is the present power situation?

Normally, during this time of the year, the average evening peak demand would be around 16,000 mega watt (MW). However, this year, as per the Southern Regional Load Despatch Centre (SRLDC), the evening peak demand has registered 19,845 MW with the off-peak demand at 15,069 MW, as against last year’s peak demand of 14,351 MW and the off-peak demand of 13,000 MW.

However, the State Load Despatch Centre (SLDC) of TANTRANSCO shows the evening peak demand crossing 20,000 MW, at 20,527 MW, and the off-peak demand at 17,037 MW on Monday (October 12, 2026).

The huge demand-supply gap of 2,000 MW is met through purchase of power through a short-term open access system. The TNPDCL is meeting the electricity demand gap by purchasing power at a high cost from gas plants through NTPC Vidyut Vyapar Nigam (NVVN), with prices ranging from ₹34 to ₹37, according to a source in TNPDCL.

What is Tamil Nadu’s full generation capacity? 

The State, as per SLDC data, has a generation capacity to the tune of 22,000 MW, which includes State utilities of hydro (2325 MW), thermal (5780 MW), gas (408 MW), wind (9563 MW), solar (14,717 MW), central generating stations (for which TNPDCL receives total share of 6,668 MW), long-term purchase (2,830 MW), medium-term purchase (2,814 MW), and short-term purchase (2,000 MW). But in effect, altogether, only 20,500 MW was being generated from all these sources, resulting in the energy gap. 

What factors pushed the State to buy expensive power?

Various factors have contributed to this situation: poor forecasting of the extended summer caused by El Niño, failure of the Southwest monsoon, not planning ahead to tie-up with power generators through short-term power purchase agreements, the waning of the wind power, and the inability to utilise maximum capacity in thermal power plants.

Why does the State have to purchase power at high cost? 

Mr. Nirmal Kumar, at a press meet on Tuesday (October 13, 2026), clarified that the central generating station of Neyveli Lignite corporation has reduced power generation by nearly 1,850 MW and meanwhile, from wind energy, only 500 MW was being received against the tied-up agreement for 3,500 MW. He added that at present, gas power was only available and was therefore, it had to be purchased at more than ₹30 per unit, and that too to meet the demand only for six hours from October 15 to 31.

What is the power situation in other southern States?

In other States like Andhra Pradesh, where power is being purchased ranging from ₹14 to ₹17, and in Bengaluru in Karnataka, unscheduled power cuts are being carried out. Mr. Nirmal Kumar claimed that it is to avoid such unscheduled power cuts ranging between two to three hours that Tamil Nadu had to resort to the high-cost power purchase.

What is the way forward?

Mr. Nirmal Kumar said issues of high demand and reduced electricity supply received from central generating stations were not faced by Tamil Nadu alone. The entire country is facing a similar situation, he said, adding that energy forecasting needs a boost, at a national scale, in order to alert States about impending power shortages.

He also attributed the current situation in Tamil Nadu to the previous DMK regime’s failure to put in place long-term energy purchase contracts. The last time such a long term power purchase contract was executed was by former Chief Minister Jayalalithaa in 2013, he said.