Adoption of competitive tariffs for 250 MW battery energy storage in Gujarat

Gujarat Urja Vikas Nigam Limited (GUVNL) has filed a petition with the Gujarat Electricity Regulatory Commission (GERC), seeking adoption of tariff rates determined through competitive bidding for the purchase of storage capacity from an autonomous battery energy storage system. The Commission accepted the petition and held a detailed hearing on the matter.

GUVNL, representing the distribution companies of Gujarat, conducted a transparent tender process for the purchase of 250 MW/500 MWh of storage capacity. This process is part of Gujarat’s ongoing efforts to integrate renewable energy sources and increase grid stability. Many bidders participated in the competitive bidding, and the final bids were determined by electronic auction.

GUVNL received nine bids offering a total capacity of 1,050 MW/2,100 MWh, significantly exceeding the capacity offered in the tender. After a thorough evaluation, eight bidders qualified for the e-reverse auction. The auction uncovered competitive storage rates, with the lowest bid coming from Gensol Engineering Limited at £448,996 per MW per month.

After the auction, GUVNL issued letters of intent to the winning bidders. The tariffs detected were significantly lower than those applied in previous similar tenders conducted by other agencies, indicating a favorable market response and competitive prices.

The Commission’s review process consisted of checking the compliance of the tender procedure with the guidelines of the Ministry of Energy. It was noted that the process was carried out transparently and in accordance with the approved deviations. The adoption of these tariffs is crucial to achieving the RPO and ESO goals, ensuring the availability of reliable storage solutions and stabilizing the integration of renewable energy into the grid.

During the hearing, the Commission raised several questions regarding operational aspects of battery energy storage systems, including the type of energy to be stored, charging verification mechanisms, and the use of storage during periods of low renewable energy generation. GUVNL provided detailed answers, explaining that the storage systems will primarily store excess wind and solar energy, and in case of insufficient renewable energy, conventional energy will be used. The Commission was also informed about the measures implemented to monitor the performance of the storage system and ensure compliance with contractual obligations.

The petitioner highlighted the importance of these storage projects in achieving long-term energy goals, including increasing grid stability, supporting the integration of renewable energy, and meeting growing RPO and ESO targets. The 12-year Battery Energy Storage Purchase Agreement (BESPA) term is consistent with the expected service life of battery systems, ensuring a reliable energy storage solution for the foreseeable future.

The successful implementation of the storage order will pave the way for future projects, contributing to Gujarat’s leadership in renewable energy and energy storage initiatives. The competitive rates discovered through this process reflect the maturing market for battery energy storage solutions and the potential for cost-effective integration of renewable energy sources.

The committee appreciated the comprehensive efforts of GUVNL in conducting a transparent and competitive bidding process. The adoption of uncovered tariffs is a significant step towards achieving the state’s goals for energy storage and renewables. The decision highlights the importance of continued innovation and investment in energy storage technologies to support the sustainable development of renewable energy in Gujarat.

More details can be found in the document here.

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