Delhi Regulator Greenlights BSES Rajdhani’s Battery Energy Storage Project

The Delhi Electricity Regulatory Commission (DERC) has approved the Battery Energy Storage System (BESS) agreement between BSES Rajdhani Power (BRPL) and Kilokari BESS for the establishment of a 20MW/40MWh energy storage project.

The Commission also adopted a single-part tariff structure, comprising capacity charges of ₹5.7million (~$68,981)/MW per year.

These charges will be billed monthly per the agreement.

Background

BRPL filed a petition under the Electricity Act, 2003, seeking approval for the BESS agreement executed on December 12, 2023, between BRPL and Kilokari BESS and adopting a single-part tariff structure.

The agreement pertains to establishing a 20 MW/40 MWh battery energy storage project at the 33/11 kV Kilokari grid substation, intended for storing, charging, and discharging electricity for BRPL.

BRPL also sought approval for deviations from the guidelines outlined in the Ministry of Power’s notification regarding the procurement and utilization of BESS as part of generation, transmission, and distribution assets, including ancillary services.

The petitioner, formed as a joint venture between R-Infra Ltd. and Delhi Power Company (DPCL), holds 51% shareholding and management control by R-Infra, with the remaining 49% owned by DPCL, a government-owned entity.

Kilokari BESS is a special purpose vehicle formed by a consortium of IndiGrid 2 and Amperehour Solar Technology.

On July 26, 2023, the Commission granted ‘in-principle’ approval for the BESS project.

Further developments occurred in August 2023 when the Ministry of Power (MOP) notified the national framework for promoting energy storage systems, emphasizing renewable energy integration and grid stability through ESS deployment.

Following this, on August 24, 2023, the petitioner engaged the Energy and Resources Institute (TERI) as a bid manager. On October 23, 2023, BRPL issued the letter of intent to the successful bidder, IndiGrid 2, and on December 22, 2023, the BESS agreement was executed.

Commission’s Analysis

The Commission noted that the bidding process conducted by BRPL aligned with the MoP guidelines, with minor deviations outlined in the request for proposal.

The petitioner justified these deviations to achieve a single-part tariff structure, with capacity charges set at ₹5.7 million (~$68,981)/MW per year. This tariff was lower than the initially proposed capacity charge of ₹10.12 million (~$121,198.3)/MW/year by the petitioner on July 7, 2023.

Considering the nature of this project, where the petitioner was not investing any capital expenditure and the approval of the BESS agreement was part of the petitioner’s power procurement process, any financial benefits derived from this project would be passed on to the petitioner’s consumers as a net offset in the power purchase cost included in the Annual Revenue Requirement (ARR).

However, concerning “Section IV, Clause I: Event of Default and the Consequences thereof, 2(c)”, the Commission directed that in the event of default and if BRPL assumed control of the project, BRPL would only be entitled to the agreed tariff of ₹5.7 million (~$68,981)/MW per year.

Any payment from BRPL to Kilokari for termination would not be factored into BRPL’s ARR determination; only the agreed tariff would be considered as the power purchase cost for BRPL.

The Commission ruled that any monetary benefits accruing to BRPL from the operation of this project would be passed on to consumers in the ARR as a net offset in the power purchase cost.

In May last year, DERC proposed to amend the state’s net metering regulations for renewable energy to provide greater flexibility to prosumers and consumers by enabling peer-to-peer transactions through blockchain or other technologies.

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