APERC Approves 500 MW BESS Project To Strengthen Andhra Pradesh Grid Stability

The Andhra Pradesh Electricity Regulatory Commission (APERC) has approved the procurement of 500 MW/1000 MWh of Battery Energy Storage System (BESS) capacity for the state’s power distribution companies. The project will be implemented under a Central Government scheme by NHPC Limited and aims to improve grid stability while supporting renewable energy integration.

The decision comes as Andhra Pradesh faces challenges linked to the “duck curve,” where solar power generation is high during the day but demand increases sharply in the evening. The proposed BESS will store surplus daytime electricity and supply it during peak hours, helping DISCOMs reduce reliance on expensive short-term power purchases. The Commission noted that market prices can go up to ₹10 per unit, while the storage system offers a more stable cost of around ₹1.85 per unit.

The storage capacity will be spread across three substations. Jammalamadugu and Ghani will each have 225 MW capacity, while Kuppam will host 50 MW. These locations have been selected to strengthen the grid and improve power supply management across the state.

The developers for the project were chosen through a competitive e-reverse auction. Patel Infrastructure Limited and ACME Solar Holdings Limited emerged as the successful bidders. The project will benefit from Viability Gap Funding support from the Central Government, covering up to 30% of the capital cost or ₹27 lakh per MWh, helping reduce the financial burden on consumers.

During the hearings, the trading margin requested by NHPC became a key issue. NHPC had proposed a margin of 7 paise per unit, but APERC rejected it as too high. The Commission said that since NHPC is acting only as an intermediary without taking major financial risk, the margin should be limited. It directed that the margin be capped at 0.5% of the capacity charges.

APERC also supported the 12-year contract period, explaining that it matches the lifecycle of Lithium Iron Phosphate batteries. Some stakeholders suggested delaying the project for lower battery prices or alternative storage options like pumped hydro, but the Commission stressed the need for immediate action.

The project is expected to be commissioned by January 15, 2027, and will support Andhra Pradesh’s goal of deploying 25 GWh of energy storage capacity.