MERC Approves MSEDCL’s Plan To Procure 2000 MW/4000 MWh Battery Energy Storage Capacity In Maharashtra

The Maharashtra Electricity Regulatory Commission has approved a major proposal by the Maharashtra State Electricity Distribution Company Limited to procure 2,000 MW/4,000 MWh of standalone Battery Energy Storage System capacity. The approval was granted through an order issued on December 31, 2025. The move is aimed at managing surplus renewable energy in the state and meeting peak electricity demand more efficiently as renewable capacity continues to grow.

MSEDCL had approached the Commission seeking approval for the procurement through a competitive bidding route, along with the proposed Request for Selection documents. In its submission, the utility highlighted a growing mismatch between daytime renewable generation and actual demand. It projected a cumulative surplus of around 76,440 million units of electricity during daytime hours over the next five financial years. This surplus is mainly due to the must-run status given to renewable power plants and the technical limitations of thermal power stations, which cannot be backed down below certain operating levels.

The utility also pointed to market trends to support its case. Data showed that real-time power prices often fall close to zero during solar generation hours. This makes it difficult for the utility to sell excess power in the market, leading to revenue losses. Battery storage was therefore presented as a practical solution to store surplus energy during the day and use it when demand is higher.

Under the approved plan, the BESS projects will be developed on a Build, Own, and Operate basis. The systems will charge during solar hours when excess energy is available and discharge during non-solar hours or peak demand periods. This energy shifting approach is expected to reduce dependence on thermal generation and help improve overall grid efficiency. The Commission noted that while MSEDCL initially proposed a two-cycle discharge configuration, this was later revised to a one-cycle system.

Regulatory requirements also played a key role in driving the procurement. As per Renewable Purchase Obligation regulations, distribution companies are required to meet Energy Storage Obligations. These obligations start at 1.5 percent in FY 2024-25 and will gradually rise to 4 percent by FY 2029-30. The Commission observed that the proposed 2,000 MW BESS capacity fits well within MSEDCL’s long-term planning, which estimates a total storage requirement of 2,750 MW by FY 2030-31.

The approved bidding documents include several important conditions. Each project must have a minimum size of 100 MW/200 MWh, and the systems must achieve at least 95 percent annual availability. To support financial viability, the Ministry of Power has approved Viability Gap Funding of up to Rs. 18 lakh per MWh. MSEDCL has also extended the term of the Battery Energy Storage Purchase Agreement from 12 years to 15 years to provide long-term certainty to developers.

In its final decision, the Commission allowed the petition and approved the bidding documents, stating that the proposed procurement is justified and necessary to balance renewable energy variability and ensure a reliable power supply to consumers.