KSERC Approves 500 kW/1 MWh BESS Project Implementation Using Regulatory Surplus In Kerala

M/s Rubber Park India Private Limited (RPIPL), a joint venture of KINFRA and the Rubber Board, filed a petition before the Kerala State Electricity Regulatory Commission (KSERC) seeking approval for a capital investment project at Rubber Park, Irapuram. The petition, filed on 6th March 2025, proposed the installation of a 500 kW/1 MWh Grid-Connected Battery Energy Storage System (BESS) and a 400 kWp Solar Plant, with a total estimated cost of ₹4.35 crore. The aim is to meet the Energy Storage Obligation (ESO) mandated by KSERC’s 2024 regulations, which require RPIPL to fulfill 2% of its energy requirement through storage by 2029–30.

Rubber Park has been operating as a licensed electricity distributor since 2003, catering to consumers within the industrial park. To meet its ESO independently, RPIPL planned to use BESS to store solar energy generated during the day for use during peak demand hours.

A tender for the BESS was first issued in September 2024 but was canceled due to insufficient technical bids. A second tender floated in December 2024 attracted ten bidders. The lowest bidder, Hykon India Ltd, quoted ₹2.499 crore for the BESS. The estimated cost for the solar plant was ₹1.4 crore. The BESS is designed to provide a gross capacity of 1671.99 kWh in the first year, reducing to 1510.95 kWh by the fifth year, ensuring usable AC output of 1000 kWh/day to meet ESO obligations till FY 2028–29. The project completion is expected within seven months from the date of award.

Funding for the project was proposed through a 100% loan from the Energy Management Centre (EMC), Kerala, at a 2% annual interest and 5% administrative charge. RPIPL opted for this concessional loan to avoid high internal capital deployment and reduce the levelized cost of storage. An audit by M/s Harikrishnan & Co recommended this financing model based on its highest net present value and a projected internal rate of return (IRR) of 7.78%. RPIPL submitted a revised levelized storage cost of ₹8.03/unit.

KSEBL raised concerns, stating the project was financially unviable, citing its calculation of levelized storage cost at ₹12.86/unit and suggesting that KSEBL could meet ESO obligations for small licensees centrally. The Commission also highlighted issues with RPIPL’s bidding process not aligning with Ministry of Power guidelines and the absence of prior approval from the Commission.

Despite the concerns, the Commission appreciated RPIPL’s proactive approach in implementing a small-scale BESS project. It allowed RPIPL to proceed with the project using a portion of its regulatory surplus of ₹7.9694 crore, but ruled out claims for interest or return on equity. O&M expenses will be allowed as per applicable regulations. The Commission also instructed RPIPL to file a separate petition for the proposed 400 kWp solar plant. The order was issued on 23rd July 2025.