The Uttar Pradesh Electricity Regulatory Commission (UPERC) has approved a joint proposal submitted by the Uttar Pradesh Power Corporation Limited (UPPCL) and the Madhya Pradesh Power Management Corporation Limited (MPPMCL) for the long-term procurement of energy through a Battery Energy Storage System (BESS). The commission issued its order on June 16, 2026, allowing the two state utilities to jointly procure 1130 MWh of storage capacity through a competitive bidding process for a period of 15 years.
The project is designed to make efficient use of battery storage resources by sharing capacity between the two states based on seasonal demand patterns. Under the arrangement, Uttar Pradesh will utilize the storage system from May to October, while Madhya Pradesh will use it from November to April. This approach is expected to improve the overall economics of the project and reduce costs for both utilities.
According to the petition, a detailed financial analysis showed that a joint procurement model would provide significant savings for Uttar Pradesh. The estimated savings are expected to range between ₹1.34 and ₹2.39 per unit of electricity. In comparison, if Uttar Pradesh had opted for a standalone procurement process, the benefits would have been much lower and could even have resulted in financial losses under certain conditions.
The initiative supports the Government of India’s renewable energy goals, including the target of achieving 50 percent of installed power generation capacity from non-fossil fuel sources by 2030. With the increasing share of solar and wind energy in the power mix, battery storage systems are becoming essential for maintaining grid stability, balancing supply and demand, and meeting peak power requirements.
The project will also receive financial assistance under the Ministry of Power’s Viability Gap Funding (VGF) scheme. The scheme provides support of ₹12 lakh per MWh or up to 30 percent of the project cost, whichever is lower. Based on the approved capacity, the total VGF support is estimated at ₹135.60 crore. The funding will be released in five stages. To qualify for the support, at least 50 percent of the project cost must involve domestic content, including locally developed Energy Management System software.
The BESS project will be location agnostic and connected through the Inter-State Transmission System (ISTS). It is expected to benefit from a complete waiver of ISTS charges, provided the project achieves commercial operation by June 30, 2028. The system will operate with a four-hour discharge duration and is expected to complete around 6,300 charging and discharging cycles during the contract period. Battery degradation will be limited to a maximum of 2 percent annually.
During the proceedings, UPPCL informed the commission that MPPMCL is leading the bidding process and has requested a three-month extension from the central government to complete tender-related activities. While approving the petition, UPERC directed UPPCL to complete the process within the required timelines and return to the commission for approval of the final Battery Energy Storage System Procurement Agreement after tariff discovery through competitive bidding.
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