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Tamil Nadu has been at the forefront of India’s ambitious decarbonisation programme, which aims to reduce emissions while meeting energy demand and supporting economic growth. Thanks to the country’s rapid deployment of renewables, India is on target to meet its carbon reduction targets agreed under the Paris accord in 2015. The state has already installed 14GW of renewable energy capacity, 16% of India’s total, and has growth targets that could increase the supply of clean energy threefold by 2030. Like the rest of the country, Tamil Nadu is at a critical inflection point with respect to electricity market design and electricity industry structure.

Previous analysis for the Energy Transitions Commission showed that for generic electricity systems, as well as for India when taken as a whole, the total system cost of a high renewable, low carbon electricity system would be lower than the cost of the current energy mix, including all system and integration costs. However, this analysis also suggested that these benefits could only be achieved if market mechanisms and other measures could increase the flexibility of both demand and supply of electricity to adapt to changing demand patterns and the variability of renewable energy supply.

This analysis also indicated the importance of local and regional differences in flexibility supply and demand and the need to evaluate options and plans at a state level to fully understand the costs, potential, and issues that might arise. This case study is one of a series of regional and national studies in India that addresses key elements of electricity market reforms and technology development that are central to the ability of Tamil Nadu, and India as a whole, to meet this challenge. See our case study for Karnataka here.

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