Loading...

First battery storage tender needs to be restructured


15 November 2021 | BRIDGE TO INDIA

First battery storage tender needs to be restructured

SECI has issued a first of its kind standalone battery storage tender for 500 MW/ 1,000 MWh capacity. Tendered capacity is split into two projects of 250 MW/ 500 MWh capacity each to be set up in Rajasthan near Fatehgarh inter-state transmission substation. Projects would be awarded on the basis of a flat availability based fixed charge quoted as INR per MW. Curiously, SECI is proposing to contract only 70% of project capacity. Balance capacity is expected to be utilised by project developers for meeting their internal needs or selling to other system users.

Key terms of the tender are listed below:

  1. Agreement term would be 12 years and the developers are required to transfer project ownership to SECI at the end of the term.
  2. Land would be provided by transmission utility or SECI on a lease basis.
  3. Developers may bid for both projects subject to fulfilment with eligibility criteria.
  4. L2 winner would need to fall within L1 price plus 2% to be eligible to win capacity.
  5. Projects are expected to be completed in 15 months from the date of the agreement.
  6. 100% transmission charge waiver would be available for project life if at least 50% of input power is sourced from renewable sources.

Most other provisions including eligibility criteria, delay and performance shortfall penalties, curtailment compensation, payment security mechanism, change in law mechanism etc are similar to provisions in renewable project tenders. While the tender claims to be technology agnostic, technical specifications seem designed for Li-ion batteries. The specifications, however, are onerous and would need to be relaxed: two operational cycles per day, annual degradation of 2.5% on a linear basis, minimum roundtrip efficiency of 85% exclusive of auxiliary power consumption and minimum annual availability of 95%.

Fatehgarh has been chosen as the project location as it has the largest transmission capacity for renewable projects – 14 GW of solar projects have been given connectivity approval so far (only 550 MW commissioned at present). Leading developers with projects connected at Fatehgarh include Adani (5,000 MW), Azure (2,500 MW) and ReNew (1,900 MW).

SECI claims that it has obtained buying interest from DISCOMs but has not confirmed names of any interested offtakers. With ancillary services and some of the other use cases for storage not developed yet in India, primary applications for these projects would be to balance and smoothen renewable power output profile, meet evening peak demand and comply with Deviation Settlement Mechanism regulations. As the batteries may be charged with any power source, it should also be possible to store cheap thermal power at late night for usage in peak morning hours. However, expected effective tariff of around INR 8.00/ kWh raises question mark over acceptance to the DISCOMs.

For the developers, 30% untied capacity would be a tough proposition particularly because of the relatively large project size. It is difficult to anticipate market demand and prices in a nascent sector with evolving regulatory framework and declining cost curve.

We believe that the government’s top objectives for battery storage right now should be to nurture an ecosystem and learning for all stakeholders through pilot installations while minimising investor risk. To that end, the tender size should be cut back drastically to, say, 200 MW/ 400 MWh, and further split into 4-5 projects. The government should also offer capital subsidies to reduce cost for early adopters and get storage projects off the ground.


Recent reports

India Solar Map | December 2023

India Solar Map | December 2023

India Solar Map 2023 is an info-graphic report covering growth of utility scale solar sector – national and state-wise commissioned and pipeline capacity, leading market players and portfolio details of top 16 project developers. Capacity addition in 2023 fell 51% YOY to 5,924 MW taking total utility scale solar capacity to 59,840 MW. Total project pipeline stands at a record 74,161 MW.

India Corporate Renewable Brief | Q4 2023

India Corporate Renewable Brief | Q4 2023

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

India PV Module Intelligence Brief | Q4 2023

India PV Module Intelligence Brief | Q4 2023

This report captures quarterly trends in module demand and supply, import and domestic production volumes, supplier market shares, break-up by technology and rating, global market scenario, pricing trends across the value chain, key policy developments and market outlook.

India Solar Compass | Q4 2023

India Solar Compass | Q4 2023

This report provides a detailed update of all key sector developments and trends in the quarter – capacity addition, leading players, tenders and policy announcements, equipment prices, financial deals and other market developments. It also provides market outlook for the next two quarters.

Inter-state OA — opportunities and challenges

Inter-state OA — opportunities and challenges

Inter-state transmission system (ISTS) open access (OA) renewable market is growing strongly on the back of multiple drivers including a waiver from ISTS charges together with decarbonisation pressure on corporates and streamlined transmission connectivity approval process. However, the ISTS route savings are viable only for projects commissioned by June 2026 (at least 75% ISTS charge waiver).

India Corporate Renewable Brief | Q3 2023

India Corporate Renewable Brief | Q3 2023

This report provides an update on key trends and developments in the corporate renewable market including capacity addition, key players, policy & regulatory issuance, financing, PPA tariffs and other market trends.

To top