Today, the electricity grid is moving towards distributed generation of power, that is, small and medium-scale generation units (mostly renewable energy), connected to the distribution network. A number of forces are driving this transition, including: competitive cost of renewables for meeting electricity demand, targets for renewable energy, demand for reliable electricity supply by consumers, growing risk of power blackouts due to climate change, and effective use of the distribution network (benefiting the distribution utility). The future electricity grid, comprising of distributed renewable energy generation (DREG)—along with other technologies including energy storage, advanced forecasting and demand response—requires that the policy makers, regulators and the electricity utilities rethink grid operations.  

Given the role of DREG in a sustainable energy future, a conducive policy environment for DREG has been missing in Tamil Nadu. The focus has been largely on building large (ultra-megawatt) renewable projects. As of 2019, DREG is estimated to contribute to only about 4% of total generation capacity in the State.

This study first lays out a definition of DREG in the context of TN, necessary to monitor and evaluate this generation segment. It reviews the existing policy and regulations in the state. Promoting DREG will require DREG-specific capacity addition planning, changes in policy, new regulations and standards, and an alternative electricity market design. Based on this analysis, the study proposes a roadmap to transition to a distributed energy system by 2030.