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MERC Approves MSEDCL's 250 MW Battery Storage Procurement at Competitive Tariff

The Maharashtra Electricity Regulatory Commission (MERC) has approved the Maharashtra State Electricity Distribution Company Limited (MSEDCL) petition to procure 250 MW/500 MWh of battery storage capacity, with an additional greenshoe option of 500 MW/1,000 MWh. The approved tariff stands at Rs 219,001 per MW per month for 12 years. The energy stored through this project will help MSEDCL fulfill its Energy Storage Obligation, integrating more renewable energy into the grid. MSEDCL must finalize an agreement with the selected bidder within 30 days.

Procurement Rationale and Competitive Bidding

MSEDCL initiated this procurement to meet peak and off-peak energy demands efficiently. The increasing share of renewable energy, particularly surplus solar generation under the MSKVY 2.0 scheme, necessitated reliable storage solutions. MSEDCL had already secured 4,074 MW of pumped storage capacity, but additional storage was needed to bridge the demand gap, projected to reach 4,600 MW by 2029-30.

The bidding process, launched in August 2024, saw 14 bidders competing. Pace Digitek won with the lowest tariff of Rs 219,001 per MW per month, significantly lower than recent similar tenders in India. MERC found the procurement process transparent and aligned with Ministry of Power guidelines.

Cost Benefits and Regulatory Approval

MERC approved the procurement, citing its importance in renewable energy integration and cost reduction. The battery storage system will store excess solar energy during the day and discharge it during peak hours, lowering reliance on expensive power purchases. Estimated savings from the project amount to Rs 703 crore per kWh.

Additionally, the project will receive Viability Gap Funding (VGF) of up to 30% of capital costs or Rs 27 lakh/MWh from the Ministry of Power, further strengthening its financial feasibility.