MP and UP Jointly launched BESS Tender of 282.5 MW Capacity

In a major move for India’s battery energy storage sector, Madhya Pradesh Power Management Company Limited and Uttar Pradesh Power Corporation have jointly issued a tender for procurement of 282.5 MW/1130 MWh Battery Energy Storage System (BESS) capacity under the Build Own Operate (BOO) model with Viability Gap Funding (VGF) support.

The joint BESS tender by UP and MP, issued on May 19, 2026, introduces one of India’s first shared interstate battery storage procurement models, where both states will use the same storage assets for six months each to improve utilization and reduce costs. According to the tender document, the demand profiles of Madhya Pradesh and Uttar Pradesh complement each other, allowing efficient year-round use of the battery systems.

Under the arrangement

MPPMCL will use the BESS systems from November 1 to April 30
while UPPCL will utilize them from May 1 to October 31

MPPMCL has been appointed as the Lead Procurer and will conduct the entire bidding process on behalf of both states.

The tender seeks battery storage projects connected to the Inter-State Transmission System (ISTS), with developers free to establish projects anywhere in India at their own cost and responsibility. The minimum project size allowed under the tender is 50 MW/200 MWh, while the maximum capacity allocation for a single bidder has been capped at 141.25 MW/565 MWh.

The selected Battery Energy Storage System Developers (BESSDs) will be responsible for:

Land acquisition
Project developmentGrid connectivity
Transmission infrastructure
Charging infrastructure
Project operation and maintenance

The developers will also have to establish co-located renewable energy projects for charging the batteries. The tender specifies that the renewable project and the BESS must be connected to the same ISTS substation.

The projects will operate under an “on-demand” dispatch model where the DISCOMs can call for battery discharge as per grid requirements. However, battery discharge will not be permitted between 11 AM and 4 PM due to the availability of daytime solar power. The systems must provide four-hour discharge capability with one cycle per day.

Interestingly, the procurers can split the discharge duration into multiple sessions. For example:

4 hours at full capacity
8 hours at half capacity
Mixed discharge combinations

This provides operational flexibility for grid balancing and peak demand management.

The tender also includes substantial Viability Gap Funding support. Developers will be eligible for:

₹12 lakh per MWh
or
30% of total project cost
whichever is lower

However, VGF support will only be available if developers meet domestic manufacturing requirements including:

Localized EMS software
Minimum 50% domestic content
Use of new batteries only
No refurbished battery systems

The VGF amount will be released in phases:

10% after financial closure and land milestones
45% after commissioning

Remaining amount over the next three years of operations

The developers must achieve financial closure within six months from signing the Battery Energy Discharge Purchase Agreement (BEDPA). The scheduled commissioning period has been fixed at 12 months from the effective date of the agreement. An additional six months may be permitted with penalties in case of delays. The tender also allows both early commissioning and part commissioning of projects.

To ensure project reliability, the tender mandates a minimum monthly availability of 95%. If availability falls below this level, developers will have to pay penalties equal to 1.5 times the applicable discharge tariff for the shortfall energy. The tender further allows annual battery degradation of 2% over the project life.

The Battery Energy Discharge Purchase Agreement will remain valid for 15 years and may be extended by another three years on mutually agreed terms if the system maintains:

More than 75% dispatchable energy capacity
Minimum 85% efficiency

The bidding process will follow a single-stage two-envelope e-tender format along with an electronic reverse auction process. Financial requirements under the tender include:

Tender document fee: ₹25,000 + GST
Bid processing fee: ₹15 lakh + GST
EMD: ₹4.8 lakh per MW
Performance Bank Guarantee: ₹24 lakh per MW

As per the official schedule:

Last date for pre-bid queries: May 26, 2026
Pre-bid meeting: May 29, 2026
Online bid submission deadline: June 9, 2026
Techno-commercial bid opening: June 11, 2026

The joint procurement model between MP and UP for BESS capacity is expected to become an important benchmark for future large-scale battery storage tenders in India.