The Kerala State Electricity Regulatory Commission has approved the implementation of a 125 MW/500 MWh Battery Energy Storage System (BESS) at Mylatti Substation in Kasargod district. The project is being carried out by the Kerala State Electricity Board Ltd (KSEBL) with support from the Ministry of Power under the Viability Gap Funding (VGF) scheme. A total of ₹135 crore has been sanctioned as VGF under the state component of the scheme.
KSEBL had earlier filed two petitions seeking in-principle approval for the project and for adopting the tariff discovered through competitive bidding. The tariff of ₹4.41 lakh per MW per month was quoted by JSW Neo Energy Limited, the lowest bidder. SECI, the Solar Energy Corporation of India, was appointed as the BESS Implementing Agency (BIA) and also handled the bidding process. A trading margin of ₹0.07 per kWh will be paid by KSEBL to SECI, which includes the cost of providing payment security.
The bidding process, conducted in compliance with guidelines issued by the Ministry of Power, was transparent and attracted participation from seven bidders. All the bidders qualified in the technical evaluation. The project has a planned discharge duration of four hours per day and a total capacity of 500 MWh. It is expected to enhance grid stability during peak demand periods, especially in non-solar hours.
KSEBL has stated that the implementation of this project will increase Kerala’s internal power handling capacity and reduce dependence on expensive power purchases from the power exchange. The BESS will store energy during daytime solar generation and discharge it during peak hours. This will not only save costs but also help manage grid fluctuations in Kasargod, a region with minimal local generation and no interstate transmission connectivity.
No upfront capital investment is required from KSEBL. Payments will start one month after commissioning and will be offset by savings in peak power purchases. The project duration is 12 years with an optional five-year extension at 60% of the original tariff. Incentives are included for high round-trip efficiency and reduced capacity degradation, along with penalties for underperformance.
The Commission approved the BESSA (Battery Energy Storage Sale Agreement) signed between SECI and KSEBL and directed that the trading margin of ₹0.07 per kWh be clarified as inclusive of payment security costs. The decision is not to be considered a precedent, and KSEBL has been instructed to negotiate lower trading margins in future projects to ensure cost optimization.
This BESS project aligns with Kerala’s renewable energy goals to meet 50% of its energy needs from renewable sources by 2030 and to be fully dependent on renewable energy by 2040. It also supports the broader national target of 500 GW of non-fossil fuel-based capacity by 2030.
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