SECI’s 4 GWh BESS Tender Finds Takers At Rs 3.52/kWh

NTPC Renewable Energy, Sembcorp Green Infra, Solarcraft Power India 8 and Hero Solar Energy have all bid at Rs 3.52 to emerge winners from SECI’s largest Solar+Storage tender till date for 2 GW Solar plus 4 GWh BESS.

While NTPC won 500 MW, Hero walked away with 270 MW, with the rest getting 150MW allotments each. The tender was India’s biggest Solar + ESS tender till date of 2 GW Solar with 1 GW/ 4 GWh ESS Capacity, matching some of the largest such tenders globally. The big difference here was the requirement of BESS with 4 hrs dispatch, unlike the two hours in previous tenders, which is what makes the price of Rs 3.52 truly attractive. For NTPC, this is one of the earliest storage tenders it has won.

The four hours of peak power at 1GW matters simply because of the small price difference of just around Rs 1/kWh vis a vis solar power.
That places it in a very competitive position vis a vis thermal baseload power in India today, where new power stations are all coming up at price estimates of Rs 4.70/unit and above, with the added risk of cost escalations during the term of the PPA.

In this case, 75% output during non-solar hours at Rs 5/kWh with the remaining during solar hours at Rs 2.5/kWh, the weighted average cost would be under Rs 4.4/kWh for the duration of the PPA.

Need To Find Off takers  

The results continue the trend of falling prices for renewable power this year, thanks mostly to falling storage costs, considering how ALMM+DCR has effectively capped the floor for solar costs at Rs 2.50/unit for now. It also calls into question SECI’s struggle to find takers for these values of solar+BESS, as discoms seems to be creating the old issue of holding out for lower costs in the next tender. This was always going to be the weakness of the reverse auction regime in a situation of falling costs, and there is a strong case for the government to push for either pooling in two or more tenders for selling at a blended cost, or risk an ever growing pipeline of unsold projects despite globally competitive prices. A stricter push for RPO obligations will also help, no doubt.