Why has Tamil Nadu gone for expensive power purchase agreements | Explained

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 which are paying much lower rates for power purchase agreements.

The government has clarified that due to the high power demand in the State this time, thanks to a prolonged summer-like situation, they have had to go in 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 this to the high cost of power purchase agreement.

What is the present power situation?

Normally during this time of the year the average evening peak demand would be in the range of 16,000 mega watt (MW) but 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, 13,000 MW.

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