Demand flexibility for a resilient power sector in Tamil Nadu

Tamil Nadu’s power sector is facing a dual challenge: rapidly increasing electricity demand and growing renewable energy (RE) penetration. While RE now constitutes nearly 58% of the state’s installed capacity, much of the generation—particularly solar power—is available only during daytime hours whereas demand peaks occur in the morning and evening. This leads to significant mismatches that stress the grid.

The state’s peak demand has increased from 16,386 MW in financial year (FY) 2019-20 to over 20,000 MW in FY 2025-26 and is projected to reach 35,263 MW by FY 2034-35. Relying solely on new generation capacity to meet this growth would be expensive, slow, and could result in underutilised assets.

Demand flexibility (DF) enables consumers to shift or reduce electricity consumption in response to grid conditions. Examples of DF measures include operating water heaters during solar-rich daytime hours, automated control of building loads and appliances, and managed charging of electric vehicles (EVs) in accordance with grid conditions.

The study proposes demand flexibility as a cost-effective lever to complement traditional supply-side efforts.

The study evaluates DF opportunities across three key segments in Tamil Nadu: residential, commercial, and electric vehicle. In the residential segment, it assesses 11 flexibility measures across six appliance categories, including air conditioners, geysers, and water pumps. For commercial consumers, it focuses on two flexibility measures for air-conditioning, while for EVs, it examines two managed-charging measures.

The assessment is conducted for a cohort of 2.5 lakh households, 1.7 lakh commercial buildings, 10,000 electric vehicles, and 500 public charging stations.

The benefits of implementing these DF measures are evaluated in terms of their economic and system-level impacts. These include avoided energy procurement costs, reductions in transmission and distribution (T&D) losses, and deferred capacity investments.

A combined DF portfolio that includes the residential, commercial, and EV segments can annually provide:

• 60–73 MW of flexibility during the morning peak
• 207–253 MW of flexibility during the evening peak
• INR 290–355 crore of system value

The analysis also shows that these measures make economic sense to both consumers and utilities, demonstrating that demand flexibility can deliver meaningful system-wide benefits while reducing the need for expensive new capacity additions.

The study recommends a three-phase roadmap for a gradual and structured transition from small-scale pilot DF programmes (Phase I), to scale-up and integration (Phase II), and finally to establishing demand flexibility as a reliable resource in power system planning and operations (Phase III).

Thus, demand flexibility can become a valuable system resource for Tamil Nadu, helping it to manage the rising peak demand and the increasing RE deployment at a significantly lower cost than that of building additional generation capacity.