DERC Approves 12.5 MW/25 MWh Battery Energy Storage Project in South Delhi

The Delhi Electricity Regulatory Commission (DERC) has approved the tariff and authorised the execution of a Battery Energy Storage System (BESS) agreement for a 12.5 MW/25 MWh grid-scale battery storage project at the 33/11 kV Shivalik grid substation in Delhi.

The order, issued on September 9, 2026, follows a petition filed by BSES Rajdhani Power Limited (BRPL) under the Electricity Act, 2003. The project is aimed at strengthening the distribution network in South and West Delhi while supporting the integration of renewable energy and meeting the region’s growing electricity demand.

The project will be implemented under a Build, Own, Operate and Transfer (BOOT) model. Once operational, the battery system is expected to provide several grid-support functions, including peak shaving, grid stabilisation, deferral of network capacity augmentation and emergency backup for critical distribution loads.

The competitive procurement process was conducted by The Energy and Resources Institute (TERI), which served as the independent bid manager. Following the technical evaluation stage, three bidders qualified for the final round before an e-Reverse Auction was conducted.

REConnect Energy Solutions Limited emerged as the successful bidder through the auction process.

The company quoted a levelised annual capacity charge of ₹35.91 lakh per MW, excluding applicable taxes. BRPL said the tariff is approximately 37.6% lower than the cost of its earlier battery storage pilot project at Kilokari, which was approved in 2024 at more than ₹57 lakh per MW.

According to the utility, the lower tariff reflects stronger competition in the battery storage market, optimisation of project design and improved price discovery through competitive procurement.

The Shivalik battery project has been planned against the backdrop of sustained growth in electricity demand in the area. Peak demand across the local network has grown at a compound annual growth rate of more than 5% over the past six years.

The 25 MWh storage system is expected to help BRPL manage periods of high demand and improve the flexibility of the distribution network. It will also support greater integration of renewable energy by allowing electricity to be stored and deployed when required.

The project will feature advanced grid-forming inverters with virtual synchronous machine capabilities and inertia controls. These technologies can enable the battery system to provide additional grid-support services beyond conventional energy storage, including improved voltage and frequency stability.

Under the proposed service-based arrangement, BRPL will not be required to make an upfront capital investment in the BESS facility. Instead, the utility will pay the agreed capacity charges to the project operator.

BRPL will, however, remain responsible for supplying the electricity required to charge the battery system.

The regulatory commission also examined operational experience from BRPL’s existing Kilokari battery storage project, particularly in areas such as energy arbitrage, savings in network charges and operational efficiencies. DERC noted that these benefits had resulted in a net annual benefit for consumers.

While approving the project, DERC directed BRPL to make certain corrections to the draft agreement before its final execution. These include changes to provisions relating to definitions and liquidated damages.

The Commission also directed that all financial and operational benefits generated through energy arbitrage must be passed on to consumers through a reduction in power purchase costs.

To ensure transparency and track the project’s performance, BRPL will be required to submit semi-annual reports on energy arbitrage performance and annual assessments detailing the project’s net benefits to consumers.

The approval marks another step in Delhi’s transition towards the use of utility-scale battery storage as a grid-management tool. With electricity demand continuing to rise and renewable energy penetration increasing, projects such as the Shivalik BESS are expected to play a growing role in improving grid flexibility, reducing peak demand pressures and enhancing the reliability of power distribution networks.