The path to installing Battery Energy Storage Systems (BESS) in Uttarakhand has now become easier. The Uttarakhand Electricity Regulatory Commission (UERC) has amended its previous regulations after considering the objections and suggestions of UJVNL (Uttarakhand Jal Vidyut Nigam Limited). The commission has approved a capacity-based tariff.
UJVNL had requested that the per-unit tariff for BESS be deemed impractical and instead be determined as a capacity charge (Rupees/MW/month). UJVNL informed the commission that most standalone BESS tenders issued across the country are based on the capacity charge model. BESS is a capital-intensive asset, requiring the entire investment upfront. The developer has to make monthly loan payments regardless of whether energy is dispatched from the battery or not.
Capacity Charge Model is Currently Prevalent
In such a scenario, a payment system based solely on per-unit discharge would expose developers to uncertain revenue, which could also impact investment and central government support schemes like VGF (Viability Gap Funding). After studying BESS tenders issued by NTPC, NHPC, and states like Rajasthan, Telangana, and Karnataka, the regulatory commission found that the capacity charge model is currently prevalent in the country.
However, the commission also clarified that it will not make any changes to the previously determined trading margin. This means that the four percent trading margin for solar projects and the five paise per unit trading margin for BESS will remain unchanged. The commission clarified that the rate of Rs. 5.78 per unit, as stipulated in the RE Regulation 2025, will now be considered equivalent to a capacity charge of Rs. 3,96,747 per megawatt per month. This clarification will be effective from the date of the order.
It will remain in effect until further orders. It is believed that this amendment will encourage investment in BESS projects in the state. BESS is a project that allows for storing solar energy generated during the day and using it during peak hours
