Vedanta Secures 500 MW Power Supply Contract with Tamil Nadu

Vedanta Limited's thermal power units, specifically Meenakshi Energy Ltd (MEL) and Vedanta Ltd Chhattisgarh Thermal Power Plant (VLCTPP), have been awarded contracts to supply a total of 500 megawatts (MW) of power to the Tamil Nadu Power Distribution Corporation Ltd (TNPDCL). Under the Power Purchase Agreement (PPA), MEL will provide 300 MW, and VLCTPP will contribute 200 MW.

This five-year contract is scheduled to commence on February 1, 2026, and will conclude on January 31, 2031. The agreed tariff for this power supply is ₹5.38 per kilowatt-hour (kWh). Vedanta highlighted that the 500 MW secured is the largest allocation from the total 1,580 MW tendered by TNPDCL, underscoring its competitive advantage.

Rajinder Singh Ahuja, CEO – Power at Vedanta Limited, emphasized the vital role of reliable baseload power in India's energy security, with thermal energy playing a critical role in maintaining stability. He stated that this achievement reflects Vedanta's growing leadership in efficient and dependable power generation. The PPAs are expected to enhance the company's revenue visibility and financial robustness, paving the way for future expansion, including the proposed demerger of its power portfolio under the "Vedanta Power" identity.

Vedanta acquired Meenakshi Energy, a 1,000 MW thermal power plant in Andhra Pradesh, in 2023, and the 1,200 MW Chhattisgarh Thermal Power Plant in 2022. The company currently operates approximately 12 GW of thermal power capacity, including nearly 5 GW of merchant power from Independent Power Producer (IPP) assets across several Indian states.

Impact: This significant power supply agreement is expected to significantly boost Vedanta Limited's revenue streams and improve its financial stability over the next five years. It strengthens the company's market position in the Indian power sector and supports its strategic growth initiatives. Investors are likely to view this as a positive development for Vedanta.

Impact Rating: 8/10

Definitions:

Power Purchase Agreement (PPA): A long-term contract between a power generator and a buyer (such as a distribution utility) for the purchase of electricity at a specified price and quantity.

Tariff: The rate or price charged for electricity, typically per kilowatt-hour.

Baseload Power: The minimum level of demand on an electrical grid over a span of time, typically provided by power plants that can operate continuously.

Merchant Power: Electricity that is sold on the spot market or through short-term contracts, as opposed to long-term PPAs.

Independent Power Producer (IPP): A private entity that owns and operates power generation facilities and sells electricity to utilities or directly to consumers.