Gensol Engineering & InGrid Bag 250 MW/500 MWh Battery Energy Storage System Project In Gujarat; Buy?

Gensol Engineering and IndiGrid have emerged victorious in the Gujarat Urja Vikas Nigam's (GUVNL) auction, winning the bid to set up pilot projects for standalone battery energy storage systems (BESS). The projects, totalling 250 MW/500 MWh, will pave the way for advanced energy solutions in Gujarat under tariff-based global competitive bidding (Phase II).

Gensol Engineering clinched 70 MW/140 MWh, quoting Rs 4,48,996 ($5,424)/MW/month, while IndiGrid secured the remaining 180 MW/360 MWh with a quote of Rs 4,49,996 ($5,436)/MW/month. The tariff quoted in this auction marks a significant 58.43% reduction compared to the previous Solar Energy Corporation of India's auction in August 2022, where JSW Energy quoted Rs 1.08 million ($13,045)/MW/month for setting up 500 MW/1,000 MWh BESS projects.

Several industry giants, including JSW Neo Energy, Hero Solar Energy, NTPC Renewable Energy, ACME Solar Holdings, SJVN Green Energy, and Vent Renewables, failed to qualify in the financial bid opening process, highlighting the competitiveness of the bidding.

GUVNL initiated the tender process in November 2023, seeking to implement energy storage systems under a build, own, and operate model. The primary goal is to efficiently utilize these systems on-demand, tailored to the requirements of state distribution companies during both peak and off-peak hours.

The selected companies, Gensol Engineering and IndiGrid, are obligated to complete the projects within 18 months from the effective date of the battery energy storage purchase agreement (BESPA). The project's power rating of 500 MWh will have a BESS capacity of 250 MW, emphasizing the maximum value of the active output and input power at the delivery point. The energy rating, measuring 500 MWh, represents the dispatchable capacity at the metering point.

Crucially, the BESS will be charged through power drawn from the Gujarat Energy Transmission Corporation network, following dispatch instructions from the state load dispatch centre. The charging and discharging of the system will be under the purview of GUVNL.

Maintenance of the transmission system up to the interconnection point, alongside bearing the entire infrastructure construction cost from the project up to the interconnection point, is the responsibility of Gensol Engineering and IndiGrid. They must guarantee a minimum system availability of 95% annually, ensuring the reliability and efficiency of the projects.

While the tender stipulated the use of commercially established and operational technologies to minimize technology risks, it did not specify the BESS technology that Gensol Engineering and IndiGrid will deploy for these projects.

This triumph follows a broader trend in India's renewable energy landscape, with Uttar Pradesh Power Corporation issuing bids last October for the establishment of five standalone BESS projects, each with a capacity of 10 MW/40 MWh.

The shares of Gensol Engineering witnessed a modest 0.5% gain, reaching Rs 1,013 per share as of 3:05 pm on the National Stock Exchange (NSE).