Kerala has amended its power procurement framework for a 300 MW evening peak power tender after renewable energy and battery energy storage system (BESS) developers raised concerns over the bid evaluation process. The revised framework, issued by the Kerala State Electricity Board (KSEB), recognises the waiver of interstate transmission system (ISTS) charges available to eligible clean energy projects for power procurement from 6 pm to midnight over a five-year period, from January 2027 to December 2031.
According to KSEB, evaluating bids solely at the generator’s CTU interconnection point could disadvantage renewable and storage-based projects despite their eligibility for full or partial ISTS charge waivers under central government policies. The utility argued that such an approach would fail to reflect the actual landed cost of power to Kerala consumers.
KSERC agreed with KSEB’s proposal to incorporate applicable ISTS charges into bid evaluation, while clarifying that the revised methodology would be used only for ranking bids and identifying the lowest bidder, without altering commercial settlement provisions under power purchase agreements.
The commission noted that renewable energy projects, particularly solar, wind and energy storage systems, are increasingly playing a critical role in meeting utilities’ power requirements and that the Centre has introduced ISTS charge waivers to promote deployment of these technologies. The order highlighted that solar and wind projects commissioned before June 30, 2025 are eligible for 100% ISTS waiver, with benefits gradually tapering for later projects. Pumped hydro storage projects awarded by June 2028 continue to enjoy full waivers, while certain standalone and RE-linked BESS projects also remain eligible for transmission charge exemptions.
Importantly, KSERC directed KSEB to ensure that electricity procured from renewable energy and BESS projects under the tender would count towards the utility’s Renewable Purchase Obligation (RPO) and Renewable Consumption Obligation (RCO) targets, and to suitably incorporate such provisions into the bidding documents.
The regulator also observed that the existing medium-term procurement guidelines issued by the Ministry of Power were originally framed primarily for coal-linked procurement under the SHAKTI policy and did not directly address procurement from renewable energy and storage projects. Consequently, modifications were considered necessary to accommodate evolving market realities and ensure competitive neutrality among thermal, renewable and storage-based suppliers.
Earlier, KSEB had received several requests from prospective renewable energy and BESS developers for more time and clarity in the bidding framework, given the complexity involved in structuring bids under the lump-sum tariff mechanism. Later, the utility extended bid timelines and proposed amendments for greater participation and efficient price discovery.
The approval is likely to make Kerala’s peak power procurement framework more favourable to renewable and storage developers, possibly enabling cleaner resources to better compete with conventional generation sources in meeting the state’s growing evening peak demand.
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