Author: Akshay Jaitly

Akshay Jaitly is Co founder Trilegal and Co founder Trustbridge Rule of Law Foundation.

On this blog:

• Electricity reforms in the economic strategy of Tamil Nadu, 7 March 2025.
• Improving electricity regulation in Tamil Nadu, 9 February 2025.
• Offshore wind in Tamil Nadu: from potential to reality, 13 January 2024.
• The difficulties of asset monetisation in the transmission sector, 9 January 2024.
• Reducing challenges to arbitration awards: lessons from court data, 26 October 2023.
• Threats to legal certainty in government contracting by electricity distribution companies, 10 June 2022.
• Implications of free transmission of renewable energy, 19 April 2022.
• Energy transition investment in India and in the world, 30 March 2022.
• The lowest hanging fruit on the coconut tree: India's climate transition through the price system in the power sector, 19 November 2021.

Electricity reforms in the economic strategy of Tamil Nadu

by Akshay Jaitly, Renuka Sane, Ajay Shah.

Electricity is important for economic growth and for India's path to decarbonisation. The field of electricity is deeply sub-national; conditions in each state are different and require ground-up thinking. In a new working paper, Electricity reforms in the economic strategy of Tamil Nadu we make the following arguments:

1. Electricity investments in Tamil Nadu have faltered, and the lack of electricity availability could hamper growth. Tamil Nadu used to be the leader in renewables investments, but these have stalled in recent years.
2. The argument that the state electricity system could just buy electricity -- and doesn't need to generate it -- has limitations. If the discoms find it difficult to pay investors on time, they will likely have difficulties paying out-of-state generators on time as well, and those firms will be swift to cut off supplies. Also, there have been instances when state governments have banned the sale of electricity to out-of-state buyers. Such events impede the purchase of electricity from out-of-state when the market is tight.
3. Given that Tamil Nadu is an export-oriented economy, renewables are an important part of its economic strategy, because exporters are shaped by ESG investments and by carbon border taxes.
4. The status-quo is coming under stress. There are feedback loops through which C&I exit reinforces C&I exit, which undermines the financial viability of the discom.
5. The future of the energy system requires a great wave of investment and risk-taking. What is required is a process of discovery, and not design, where profit-motivated private persons peer into the future, speculate about what might work, and take risks in building businesses that constitute bets about certain technologies and business models. This process requires investibility in the Tamil Nadu electricity system.
6. The problem of electricity is not just a narrow problem within the energy sector; in Tamil Nadu it rises to a greater materiality within the overall economic growth strategy.

The paper offers a feasible and practical path to solutions.