The Andhra Pradesh Electricity Regulatory Commission (APERC) has approved the procurement of 500 MW / 1000 MWh Battery Energy Storage System (BESS) capacity to strengthen grid stability and support renewable energy integration in the state.
The project will be implemented by NHPC Limited under a Central Government scheme and is aimed at addressing power supply challenges, particularly those arising from the growing share of solar energy.
Addressing the ‘Duck Curve’ Challenge
The Commission highlighted that Andhra Pradesh is increasingly facing the “duck curve” phenomenon, where solar power generation peaks during the day while electricity demand rises sharply in the evening.
The proposed BESS project will store surplus daytime solar power and supply it during peak demand hours. This is expected to help distribution companies (DISCOMs) reduce reliance on costly short-term power purchases.
According to APERC, market power prices can reach up to ₹10 per unit, whereas energy supplied through the storage system is estimated to cost around ₹1.85 per unit, offering a more stable and economical solution.
Project Deployment Across Key Substations
The approved storage capacity will be distributed across three substations:
- Jammalamadugu – 225 MW
- Ghani – 225 MW
- Kuppam – 50 MW
These locations have been strategically selected to enhance grid reliability and improve power management across the state.
Bidding and Financial Support
The project developers were selected through a competitive e-reverse auction process.
Patel Infrastructure Limited and ACME Solar Holdings Limited emerged as the successful bidders.
The project will receive Viability Gap Funding (VGF) support from the Central Government, covering up to 30% of the capital cost or ₹27 lakh per MWh, helping to reduce the financial burden on consumers.
Regulatory Decisions on Trading Margin
During the approval process, APERC reviewed the trading margin proposed by NHPC.
While NHPC had sought a margin of 7 paise per unit, the Commission rejected the proposal, stating that the margin was excessive given NHPC’s limited financial risk as an intermediary.
APERC directed that the trading margin be capped at 0.5% of capacity charges.
Contract Tenure and Technology Considerations
The Commission approved a 12-year contract period, aligning it with the lifecycle of Lithium Iron Phosphate (LFP) battery technology.
Despite suggestions from stakeholders to delay the project in anticipation of falling battery prices or alternative storage solutions such as pumped hydro, APERC emphasized the urgency of immediate deployment to address current grid challenges.
Commissioning Timeline and Long-Term Goals
The BESS project is expected to be commissioned by January 15, 2027.
It forms part of Andhra Pradesh’s broader strategy to deploy 25 GWh of energy storage capacity, supporting the state’s renewable energy expansion and long-term energy security goals.
