In a major development for Telangana’s clean energy transition, Telangana Power Generation Corporation Limited has approached Telangana Electricity Regulatory Commission seeking approval for tariffs discovered through a recent competitive bidding process for large-scale battery storage projects. The petition, filed under Section 63 of the Electricity Act, 2003, is aimed at implementing 1,500 MWh of Standalone Battery Energy Storage Systems (BESS) across the state to strengthen grid stability and support renewable energy integration.
The project is part of a broader initiative by the Government of India to enhance energy storage capacity and improve the reliability of renewable energy-based power systems. Telangana was allocated 1,500 MWh of BESS capacity under this initiative, recognizing the state’s growing renewable energy deployment and future power balancing requirements.
According to the proposal, the battery storage systems will be developed at two strategic locations owned by TGTRANSCO. The projects will be installed at the Maheswaram and Choutuppal 400KV/220KV substations, with each location accommodating 750 MWh capacity. The systems are designed with a discharge capacity of 187.5 MW for four hours, enabling utilities to supply power during peak demand periods, particularly in the morning and evening when solar and wind generation typically decline.
The battery storage facilities will be developed under the Build-Own-Operate (BOO) model. Once operational, the systems will provide on-demand electricity support to state utilities and help maintain grid stability during fluctuations in renewable energy generation. The project is expected to significantly reduce pressure on conventional power generation resources and improve the overall efficiency of power distribution management in Telangana.
To support the high capital cost associated with battery storage deployment, the Union Ministry of Power has approved Viability Gap Funding (VGF) support of Rs. 18 lakh per MWh. The subsidy will be provided through the Power System Development Fund (PSDF). The VGF support will be released in stages linked to financial closure, commissioning milestones, and successful completion of the first year of project operations.
Under the bidding guidelines, selected developers are required to complete construction and commission the battery storage systems within 18 months from the date of signing the agreements. The projects will operate under a long-term commercial structure with a 15-year operational period.
TGGENCO acted as the intermediary procurer and conducted the procurement process through Tariff-Based Global Competitive Bidding along with an e-Reverse Auction mechanism to ensure competitive pricing. The bidding process attracted participation from global companies, consortiums, and SEBI-registered Alternative Investment Funds. To encourage domestic manufacturing and local supply chains, bidders were also required to maintain a minimum of 20% local Indian content in the project components.
Following the completion of the financial bidding process, Coal India Limited and Sarus Infrastructures Private Limited emerged as the successful developers for the projects.
As part of the commercial structure, TGGENCO will sign Battery Energy Storage Purchase Agreements (BESPA) with the selected developers and corresponding Battery Energy Storage Sale Agreements (BESSA) with Telangana DISCOMs. The corporation has also been permitted to charge a trading margin of seven paise per kWh for energy discharged under the arrangement to manage administrative expenses and payment security mechanisms.
The approval of the discovered tariffs by TGERC is expected to accelerate the implementation of these battery storage projects and support Telangana’s long-term renewable energy integration goals while strengthening the state’s electricity infrastructure.
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