The Kerala State Electricity Regulatory Commission (KSERC) has granted approval for a significant 125 MW/500 MWh Battery Energy Storage System (BESS) at the Mylatti Substation in Kerala’s Kasargod district. This landmark project, spearheaded by the Kerala State Electricity Board Ltd (KSEBL) and supported by ₹135 crore in Viability Gap Funding (VGF) from the Ministry of Power, marks a crucial advancement in the state’s grid modernization and renewable energy integration efforts.

The Solar Energy Corporation of India (SECI) served as the BESS Implementing Agency, overseeing a competitive bidding process that saw JSW Neo Energy Limited emerge as the lowest bidder with a tariff of ₹4.41 lakh per MW per month. KSEBL will pay SECI a trading margin of ₹0.07 per kWh, which includes payment security costs. The transparent bidding, attracting seven qualified bidders, underscores robust market interest in grid-scale storage solutions.

Designed for a four-hour daily discharge duration, the 500 MWh BESS is poised to significantly enhance grid stability, particularly during non-solar peak demand periods. KSEBL anticipates that the system will bolster Kerala’s internal power handling capacity, mitigating dependence on costly power purchases from the power exchange. The BESS will strategically store surplus solar energy generated during daytime hours, discharging it to meet evening peak loads, thereby optimizing energy costs and managing grid fluctuations in Kasargod, a region characterized by minimal local generation and limited interstate transmission connectivity.

Financially, the project structure is advantageous for KSEBL, requiring no upfront capital investment. Payments to JSW Neo Energy will commence one month post-commissioning, offset directly by savings derived from reduced peak power procurement. The agreement spans 12 years, with an optional five-year extension at 60% of the original tariff. The contract incorporates incentives for high round-trip efficiency and minimal capacity degradation, alongside penalties for underperformance, ensuring operational excellence.

KSERC’s approval of the Battery Energy Storage Sale Agreement (BESSA) between SECI and KSEBL included a directive for clarification on the trading margin’s inclusivity of payment security costs. The Commission also advised KSEBL to negotiate lower trading margins for future projects, emphasizing cost optimization. This initiative aligns seamlessly with Kerala’s ambitious renewable energy targets: achieving 50% of its energy needs from renewable sources by 2030 and full renewable energy dependence by 2040. Furthermore, it contributes to India’s broader national objective of establishing 500 GW of non-fossil fuel-based electricity generation capacity by 2030.