Advancing Gujarat’s Renewable Energy: GUVNL Seeks Tariff Approval for 250 MW Battery Storage with 500 MWh Capacity

Posted On - 30 May, 2024 • By - King Stubb & Kasiva

Summary

The Gujarat Electricity Regulatory Commission (GERC) is deliberating a petition filed by Gujarat Urja Vikas Nigam Limited (GUVNL) under Section 63 read with Section 86(1)(b) of the Electricity Act, 2003.[1] The petition seeks the adoption of the tariff rate discovered through a competitive bidding process for the procurement of storage capacity from a 250 MW/500 MWh Standalone Battery Energy Storage System (BESS) in Gujarat. This petition, filed under RfS No. GUVNL/BESS/Phase II dated November 29, 2023, involves two respondents: M/s Gensol Engineering Limited and M/s IndiGrid 2 Limited.

Case Timeline

  • November 29, 2023: GUVNL issues RfS No. GUVNL/BESS/Phase II for the procurement of BESS.
  • November 30, 2023: The tender is advertised in two national newspapers.
  • April 6, 2024: The matter is initially heard by the Commission.
  • May 2, 2024: The daily order is issued by the GERC with directions for further submissions within 10 days.

Issue Raised

The primary issue raised in this petition is the adoption of the tariff rate discovered through the competitive bidding process conducted by GUVNL for the procurement of a 250 MW/500 MWh BESS in Gujarat. The petition seeks to have the discovered tariffs adopted by the Commission to move forward with the project.

Appellant’s Arguments

Representatives from Gujarat Urja Vikas Nigam Limited (GUVNL), Mr. Sourav Nandy and Mr. Sumit Harwani, elaborated on the process of discovering tariffs through a transparent and competitive bidding mechanism. They explained that the tariffs were identified under a bidding process initiated on November 29, 2023.

The details of the successful bids were presented:

  • M/s Gensol Engineering Limited secured a bid for 70 MW/140 MWh at a tariff of Rs. 448,996 per MW per month.
  • M/s IndiGrid 2 Limited secured a bid for 180 MW/360 MWh at a tariff of Rs. 449,996 per MW per month.

The Request for Selection (RfS) issued by GUVNL includes specific mandates for the developers. These projects must be developed on a Build, Own, and Operate (BOO) basis. Additionally, the energy storage systems are to be utilized on an ‘On-Demand’ basis by the State Discoms during peak and off-peak hours.

The RfS also stipulates a project timeline where all projects must be completed within 18 months from the signing date of the agreement. The minimum bid size is set at 70 MW, and developers are responsible for the entire infrastructure from the project site to the interconnection points, including all associated costs.

GUVNL’s representatives emphasized that the battery storage system is intended to store surplus wind and solar power. The system must support two complete charge-discharge cycles per day, ensuring an optimal battery lifespan of 12 years. In situations where renewable energy is insufficient, such as during the rainy season or low wind periods, conventional power will be used to charge the battery.

The Commission raised several queries which GUVNL’s representatives addressed:

  • Verification of Battery Usage: The mechanism for verifying whether the battery is charged and ensuring compliance with operational requirements.
  • Post-12 Year Scenario: Plans for the battery system after its 12-year operational lifespan.
  • Second Bid Requirements: The rationale and studies conducted by GUVNL for initiating a second round of bids.

Judgment

The GERC has considered the submissions from GUVNL and noted the absence of M/s IndiGrid 2 Limited during the hearing. The Commission has directed GUVNL to file detailed justifications and reasons within 10 days. Respondents are also allowed to submit their written responses within this period. The Commission will pass an appropriate order after reviewing the submissions.

Analysis

The petition by GUVNL underscores the critical role of competitive bidding in determining fair and efficient tariffs for large-scale energy storage projects. The emphasis on transparent processes and detailed project specifications reflects a robust regulatory framework aimed at integrating renewable energy sources effectively. The queries raised by the Commission highlight concerns about operational reliability, future planning post-battery lifespan, and the rationale behind multiple bidding rounds. These aspects are crucial for ensuring the long-term sustainability and efficiency of energy storage systems, which are integral to managing the variability of renewable energy sources.

[1] https://gercin.org/wp-content/uploads/2024/05/2346-of-2024-GUVNL-Vs.-Ms.-Gensol-Engineering-Limited-Others.pdf