The Odisha Electricity Regulatory Commission (OERC) has approved discovered tariffs in the range of ₹304,000 (~$3,226)/MW/month and ₹354,000 (~$3,757)/MW/month for GRIDCO  to procure 125 MW/500 MWh battery energy storage capacity for 15 years.

The Commission also approved the draft Battery Energy Storage Purchase Agreement (BESPA) to be executed between GRIDCO and the selected developers.

It stated that GRIDCO’s tariff-based competitive bidding process was transparent and competitive.

The Commission directed GRIDCO to submit the signed BESPA at the earliest to comply with the Ministry of Power timelines for availing the viability gap funding (VGF) support.

The respondents in this case were the state’s four distribution companies (DISCOMs).

Background

GRIDCO approached the Commission seeking approval to procure battery storage capacity under the Electricity Act, 2003.

The project involves the installation of 125 MW/500 MWh battery energy storage systems across six grid substations in the state, supported by ₹900 million (~$9.55 million) VGF from the Power System Development Fund.

GRIDCO submitted that increasing renewable energy penetration has created challenges in balancing supply and demand, especially during evening peak hours when solar generation is unavailable, and that BESS would help store surplus energy and ensure grid stability.

In the e-reverse auction, Coal India and Onward Solar Power emerged as successful bidders for different clusters.

The prices discovered through e-reverse auction for Cluster I, Cluster II, and Cluster III were ₹304,000 (~$3,226)/MW/month, ₹305,000 (~$3,237)/MW/month, and ₹375,000 (~$3,981)/MW/month, respectively.

GRIDCO negotiated with Onward Solar and final negotiated tariff for Cluster III was ₹354,000 (~$3,757)/MW/month.

The tender was floated in December last year.

The DISCOMs broadly supported the proposal, stating that the system would require approximately 254.47 MU of annual charging energy against dispatchable energy of about 204.75 MU per annum.

They noted that the effective cost of stored power would range between ₹6.38 (~$0.068)/kWh and ₹6.74 (~$0.072)/kWh, which is economical compared to peak-hour power procurement and would help reduce deviation penalties.

However, they raised concerns about the applicability of transmission charges and suggested clarifications and minor amendments to the BESPA provisions.

Commission’s Analysis

The Commission observed that the proposed battery storage projects align with national and state objectives for integrating renewable energy and maintaining grid stability.

It added that with rising renewable energy penetration, the state’s system operators may  face immense challenges in grid balancing; therefore, consumption of renewable electricity, either directly or through an energy storage system, would contribute to compliance under ‘Other Renewable Energy.’

The Commission found the bidding process transparent and competitive, with tariffs comparable to those in similar projects in other states.

It also reviewed the terms of the BESPA, including requirements such as minimum round-trip efficiency of 85%, annual availability of 95%, a project completion timeline of 18 months, and a contract period of 15 years.

Addressing the concerns raised by DISCOMs, the Commission clarified that provisions on auxiliary power consumption were already covered by existing clauses and regulations.

The Commission emphasized that GRIDCO must closely monitor project implementation, ensure compliance with environmental norms, including battery disposal, and charge-discharge cycles.

Recently, OERC proposed new regulations to promote energy procurement from renewable sources within the state until the financial year 2029-30.

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