CERC rejects SECI's first battery storage project over two-year delay

The Central Electricity Regulatory Commission (CERC), the quasi-judicial apex sector regulator has rejected the tariff discovered in the first-ever grid-scale battery energy storage system (BESS) offered by Solar Energy Corporation of India (SECI).

 

SECI which is the renewable energy project tendering agency under the aegis of the Ministry of New and Renewable Energy awarded this project in 2022.

 

CERC has cited the “delay in signing power supply and purchase agreements (PSAs and PPAs)” and the reduction in BESS prices over the past two years as the reason for rejecting the tariff. Delay in signing PSA and PPA for SECI’s awarded projects is already at the centre of the controversy involving the Adani group’s alleged bribery case under investigation in the US.

 

A spokesperson for SECI did not respond to emailed queries until the time of going to press. JSW Energy in an exchange notification on January 3 said it will appeal the decision. 

 

The project in question now is the 1,000 megawatt (Mw) BESS project offered by SECI in April 2022. This was the first BESS tender issued after the standard bidding guidelines were issued by the Ministry of Power for energy storage projects in the country.

 

The project tendering through reverse auction was concluded in August 2022 with JSW Energy emerging as the winner by quoting the lowest tariff of Rs 10,88,917 per Mw per month for two projects totalling 1,000 Mw.

 

According to the submission made by SECI to CERC, it issued a letter of award (LoA) to JSW five months later in January 2023. And then took another five months to sign a PSA with Gujarat Urja Vikas Nigam (GUVNL). In June 2023. SECI then signed the PPA for partially awarded capacity in February 2024.

 

CERC during the case proceedings said, “We observe that the e-reverse auction was conducted on August 25, 2022, whereas there was a delay of 145 days in the issuance of LoAs. Further, PSA was executed after 160 days of issuance of LoAs. SECI signed a PPA for 150 Mw contracted capacity with the successful bidder 245 days after the PSA signed with GUVNL. SECI has not submitted any explanation for these delays.”

 

The commission has thereafter pointed at the significant reduction in the price of BESS projects during the two-year delay by SECI. According to CERC, the price of BESS has reduced to Rs 3,81,000 to Rs 3,81,999 per Mw per month, discovered recently in another SECI tender in August 2024.

 

CERC noted, “We are of the view that this decline reflects the decreasing cost of batteries due to a reduction in material cost and the growing competitiveness of BESS projects. We are of the view that even though the bid evaluation process has been complied with as per the bidding guidelines, the tariff so proposed to be adopted is not aligned with the prevailing market prices in view of the delay in signing of PSA and PPA.”

 

It further said the chronology of the events submitted by the petitioner (SECI) revealed that there had been a delay in achieving the timelines specified in the guidelines and the request for selection documents. “We are of the view that the unreasonable delay (for whatever reason) in the instant case will lead to unintended gains for the developer and a wrongful loss to the public at large,” CERC said.

 

In the final order, CERC not only rejected the tariff but reprimanded SECI for not adhering to the timelines, accorded under the Electricity Act, 2003, which is the basis of tendering and tariff discovery in the sector.

 

“The commission’s decision to reject the prayer for adoption of tariff is solely based on the circumstances in the present case — that is, due to inordinate delay in signing of battery energy storage purchase agreement/battery energy storage sale agreement and subsequent cost reduction in BESS leading to undue benefit to the developer at the cost of consumers. SECI should have been more careful in adhering to the timelines. The commission could not have overlooked the consequences of delay,” it said.

TIMELINE OF INDIA’S FIRST GRID-SCALE BESS PROJECT

 

2022

 

March: Ministry of Power issues BESS bidding guidelines

 

April: SECI releases RfS for 1,000 MW BESS

 

August: E-reverse auction: lowest tariff Rs 10.8 lakh/Mw/month

 

2023

 

January: JSW Energy awarded project

 

June: SECI signs supply agreement with GUVNL

 

2024

 

February: Purchase agreement for 150 Mw signed; 150 Mw ancillary services pending

 

September: Gujarat Electricity Regulatory Commission approves GUVNL supply agreement

 

2025

 

January: CERC rejects tariff due to delays and price drops