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CERC’s Rejection of SECI’s BESS Tariff
Context:
The Central Electricity Regulatory Commission (CERC) has rejected the proposed tariff for the Solar Energy Corporation of India’s (SECI) first battery energy storage project due to significant delays and market price shifts.
What is BESS?
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- A Battery Energy Storage System (BESS) is a revolutionary technology designed to store electrical energy, typically harvested from renewable sources like solar and wind, for later use.
- By ensuring consistent power availability despite the unpredictability of renewable energy supply, BESS plays a critical role in grid stability and energy resilience.
- Key Benefits:
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- Renewable Energy Integration: BESS stores surplus energy generated by renewable sources, ensuring a steady power supply and balancing the intermittent nature of wind and solar energy.
- Grid Stabilisation: BESS absorbs excess power when production is high and discharges it when demand peaks, significantly reducing the occurrence of power blackouts.
- Reduced Emissions: By reducing reliance on inefficient peaker plants, BESS contributes to significant reductions in greenhouse gas emissions.
- Backup Power Resource: BESS provides reliable backup power during unexpected outages, enhancing energy resilience.
Project Background:
- SECI, under the Ministry of New and Renewable Energy, awarded the 1,000 MW BESS project in April 2022.
- The project was tendered through a reverse auction, where JSW Energy emerged as the winner with the lowest bid of ~10,88,917 per MW per month.
- However, SECI faced delays in the process, including a five-month delay in issuing the letter of award (LoA), and additional delays in signing Power Supply Agreements (PSA) and Power Purchase Agreements (PPA).
Reasons for Rejection:
- Delays in signing PSAs and PPAs: CERC pointed out the 145-day delay in issuing LoAs and 160-day delay in signing the PSA with Gujarat Urja Vikas Nigam (GUVNL). The PPA was signed 245 days after the PSA, and SECI failed to explain these delays.
- Price reduction in BESS: CERC noted that BESS prices had decreased significantly over the two-year delay.
- Recent tender prices were reported to be between ~3,81,000 to ~3,81,999 per MW per month. This price reduction was attributed to lower battery material costs and increased competitiveness in the market.
CERC’s Concerns and Impact on SECI:
- CERC emphasised that delays led to unintended gains for developers and potential losses for consumers. It stated that SECI’s failure to adhere to timelines under the Electricity Act, 2003 had a detrimental impact.
- The commission rejected the tariff based on these delays and the subsequent cost reduction in BESS.
- CERC reprimanded SECI for not adhering to timelines, highlighting the importance of strict adherence to bidding and tariff discovery guidelines. The final order emphasised that the inordinate delay resulted in unfair advantages to the developer and caused a potential loss to the public.
