Electricity market reform – Tamil Nadu case study

The report finds that implementing a portfolio of flexibility resources and market reforms could reduce electricity costs by up to 13% and carbon emissions by up to 17% in Tamil Nadu. Key opportunities include leveraging electric vehicle charging, agricultural pumping, and retrofitting coal plants to operate at lower technical minimums. The study emphasizes that while demand flexibility is often the lowest cost, a combined approach with storage and powerplant flexibility provides the highest system reliability and carbon benefits. Integration into a wider India-wide market could further reduce system costs by an additional 6%.

• Developing flexible energy markets and resources within Tamil Nadu could reduce average electricity costs by up to 13% and carbon emissions by up to 17% by 2030, even if the state remains isolated from interstate power markets.
• A diversified portfolio of flexibility options—combining demand flexibility, energy storage, and powerplant flexibility—is more effective than relying on a single resource, offering the highest reductions in excess energy and carbon emissions while ensuring system security.
• Full integration into an India-wide electricity market, characterized by strong transmission links and the absence of constraints, could lower system costs for Tamil Nadu by an additional 6%.
• Demand flexibility is generally the most cost-effective new resource. Specifically, electric vehicle (EV) charging, particularly through a battery-swapping model, is identified as one of the cheapest forms of flexibility, potentially accessing 80-100% of EV flexibility potential.
• Agricultural pumping, which represents 15% of Tamil Nadu's demand, offers significant low-cost potential for daily balancing and ramping, provided that feeder separation is implemented to isolate pumping from domestic supply.
• Coal-fired powerplants can provide up to 7GW of flexibility capacity by 2030. This includes reducing mandated technical minimums from 70% to 55% for some plants and retrofitting 1.98GW of capacity to run as low as 40%.
• Battery energy storage remains a high-capital-cost option and is less competitive than demand response or powerplants for single-use flexibility. However, its economic viability improves through 'stacking' multiple services, such as combining energy shifting with voltage support or T&D deferral.
• Industrial demand, which accounts for 30-45% of the state's electricity supply, provides a particularly attractive opportunity for seasonal load shifting, especially through the management of maintenance periods and captive generation.
• Without flexibility planning and market reforms, renewable energy generators in Tamil Nadu could face curtailment of 15-20% by 2030, which is more than double the Indian average.

APA

Udetanshu, Baghel, H., & Nelson, D. (2020). Electricity market reform – Tamil Nadu case study. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/12/Electricity-market-reform-Tamil-Nadu-case-study-December-2020.pdf

Chicago

Udetanshu, Himanshu Baghel, and David Nelson. Electricity market reform – Tamil Nadu case study. Climate Policy Initiative, 2020. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/12/Electricity-market-reform-Tamil-Nadu-case-study-December-2020.pdf.

Wikipedia

{{cite report |last1=Udetanshu |last2=Baghel |first2=Himanshu |last3=Nelson |first3=David |title=Electricity market reform – Tamil Nadu case study |publisher=Climate Policy Initiative |date=June 2020 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/12/Electricity-market-reform-Tamil-Nadu-case-study-December-2020.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{udetanshu2020electricity, author = {Udetanshu and Baghel, Himanshu and Nelson, David}, title = {{Electricity market reform – Tamil Nadu case study}}, institution = {Climate Policy Initiative}, year = {2020}, month = jun, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/12/Electricity-market-reform-Tamil-Nadu-case-study-December-2020.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }