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					</table><p>The Andhra Pradesh Electricity Regulatory Commission (<a href="https://aperc.gov.in/" target="_blank" rel="noopener">APERC</a>) has approved the state distribution companies’ performance review petitions for the financial year (FY) 2025, allowing limited changes to future resource plans, such as revisions to demand, sales, and energy requirements, based on actual performance.</p>
<p>The order is in response to the petition filed by Southern Power Distribution Company of Andhra Pradesh (<a href="https://www.apspdcl.in/" target="_blank" rel="noopener">APSPDCL</a>), Andhra Pradesh Central Power Distribution Corporation (<a href="https://www.apcpdcl.in/" target="_blank" rel="noopener">APCPDCL</a>), and the Eastern Power Distribution Company of Andhra Pradesh (<a href="https://www.apeasternpower.com/" target="_blank" rel="noopener">APEPDCL</a>).</p>
<p>Some stakeholders had flagged concerns about demand, costs, and project delays during a public hearing on the petitioners’ performance. However, the Commission found the performance mostly satisfactory.</p>
<p><strong>Background</strong></p>
<p>APSPDCL, APCPDCL, and APEPDCL filed a petition with the Commission to report their actual performance for FY 2025, and compare it with earlier estimates.</p>
<p>The DISCOMs procured 7,000 MW of solar power from the Solar Energy Corporation of India (SECI). However, they claimed that the project timelines were delayed due to the lack of readiness of the interstate transmission system infrastructure. Supply of this power is now expected by May 2029.</p>
<p>They proposed some changes to the Resource Plan for FY 2026-27, outlining how distribution companies (DISCOMs) would meet future electricity demand, including power procurement, capacity additions, and investor requirements.</p>
<p>These suggestions included revising the demand and energy requirement estimates, adjusting power procurement plans, delaying some project timelines, and modifying capital expenditure by increasing future investments and carrying forward unfinished works. The petitioners proposed using renewable energy certificates (RECs) mainly to meet their renewable consumption obligation (RCO) targets.</p>
<p>In January 2026, APERC issued a public notice inviting comments on the petitions filed by the DISCOMs. Stakeholders raised concerns about delays in solar projects, excess renewable energy procurement, data transparency, and high capital expenditure plans. They questioned the demand projections, the surplus power assessment, and the REC pricing.</p>
<p>The stakeholders also expressed concerns over lower-than-expected electricity sales and demand.</p>
<p>The DISCOMs stated that the project delays were due to transmission issues beyond their control and that they had followed existing agreements. They said that renewable procurement met regulatory requirements and that the data was already disclosed in their filings. The DISCOMs stated that the REC pricing reflected market trends and that higher capital spending was due to new programs, delays, and pending projects.</p>
<p><strong>Commission’s Analysis</strong></p>
<p>The Commission noted that the DISCOMs’ performance variations were reasonable and had already been considered in earlier tariff orders; they did not require further review.</p>
<p>The Commission also highlighted certain provisions in the SECI project agreements. However, it observed that the power sale and purchase agreements require solar power developers to set up manufacturing facilities within a specified timeline, failing which a tariff reduction of ₹0.18 (~$0.002)/kWh would apply.</p>
<p>APERC directed the DISCOMs to report on solar manufacturing commitments linked to tariffs. The DISCOMs’ compliance with renewable energy targets was satisfactory. The Commission noted the proposed changes to capital expenditure. It stated that the changes were too premature and future spending would be reviewed later based on actual progress and true-up filings.</p>
<p>The Commission observed that the delays in solar projects were primarily due to transmission issues, not to any issues with the project developers.</p>
<p>The regulator said the DISCOMs were compliant with RPO/RCO obligations and needed no further directions. It also noted that concerns about renewable compliance and RECs had already been addressed in earlier Commission orders.</p>
<p>The Commission permitted limited adjustments already included in earlier tariff orders, such as updates to demand, sales, and energy requirement estimates based on actual performance.</p>
<p>This March, APERC <a href="https://www.mercomindia.com/andhra-issues-draft-resource-adequacy-framework-for-reliable-power-supply?" target="_blank" rel="noopener">issued</a> a draft framework for resource adequacy planning to ensure that the state&#8217;s electricity demand is reliably met while maintaining an optimal mix of generation resources.</p>
<p>Subscribe to Mercom’s real-time <a href="https://www.mercomindia.com/product/mercoms-renewable-energy-regulatory-updates" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.</p>


Andhra Pradesh Power Regulator Defers Major Resource Plan Changes of DISCOMs


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					</table><p>The Andhra Pradesh Electricity Regulatory Commission (<a href="https://aperc.gov.in/" target="_blank" rel="noopener">APERC</a>) has approved the battery energy storage sale agreements (BESSAs) and the associated battery energy storage purchase agreements (BESPAs) to procure 500 MW/1,000 MWh of battery energy storage capacity by the state’s distribution companies (DISCOMs).</p>
<p>The Commission also adopted the tariffs resulting from a competitive bidding process for a 12-year contract period.</p>
<p>However, APERC rejected NHPC’s proposed trading margin of ₹0.07 (~$0.0007)/kWh, directing that the margin be capped at 0.5% of the monthly capacity charges, as permitted under the <a href="https://powermin.gov.in/" target="_blank" rel="noopener">Ministry of Power</a>’s guidelines.</p>
<p><strong>Background </strong></p>
<p>The petition was filed by Eastern Power Distribution Company of Andhra Pradesh (<a href="https://www.apeasternpower.com/" target="_blank" rel="noopener">APEPDCL</a>), Southern Power Distribution Company of Andhra Pradesh (<a href="https://www.apspdcl.in/" target="_blank" rel="noopener">APSPDCL</a>), and Andhra Pradesh Central Power Distribution Corporation (<a href="https://www.apcpdcl.in/" target="_blank" rel="noopener">APCPDCL</a>), seeking approval to procure 500 MW/1,000 MWh of battery storage capacity.</p>
<p>The battery storage project is part of the Government of India’s program that offers viability gap funding (VGF) of up to 30% of the capital cost or ₹2.7 million (~$29,138)/MWh, aimed at promoting energy storage to facilitate the integration of renewable energy.</p>
<p>The tender was <a href="https://www.mercomindia.com/nhpc-1-gwh-bess-andhra-pradesh" target="_blank" rel="noopener">floated</a> in February last year.</p>
<p>NHPC <a href="https://www.mercomindia.com/acme-patel-infrastructure-win-nhpcs-1-gwh-battery-energy-storage-auction" target="_blank" rel="noopener">conducted</a> the e-reverse auction in June 2025. The selected developers were</p>
<ul>
<li>Patel Infrastructure for 225 MW/450 MWh at the Jammalamadugu substation with a tariff of ₹208,000 (~$2,244.76)/MW per month.</li>
<li>ACME Solar Holdings for 50 MW/100 MWh at the Kuppam substation with a tariff of ₹210,000 (~$2,266.34)/MW per month.</li>
<li>ACME Solar Holdings for 225 MW/450 MWh at the Ghani substation with a tariff of ₹222,000 (~$2,395.85)/MW per month.</li>
</ul>
<p>Concerns were raised by several stakeholders regarding tariff levels, transparency in the bidding process, the 12-year contract duration, and the ₹0.07 (~$0.0007)/kWh trading margin proposed for NHPC.</p>
<p>NHPC and ACME Solar stated that the tariffs were determined through a transparent, competitive bidding process compliant with the Ministry of Power guidelines and that battery storage is essential for integrating renewable energy and managing peak demand.</p>
<p>They emphasized that the discovered tariffs aligned with the prevailing market rates. The tender evaluation committee rigorously analysed the e-reverse auction price bids, benchmarking them against current market rates, and was satisfied with the validity of the respective L1 (lowest) tariffs.</p>
<p>NHPC argued that the ₹0.07 (~$0.0007)/kWh trading margin is uniformly applied across its renewable energy and battery storage projects and is compliant with the Ministry of Power&#8217;s guidelines.</p>
<p><strong>Commission’s Analysis </strong></p>
<p>APERC observed that Andhra Pradesh has a large renewable energy base, which creates grid management challenges due to the intermittency of solar and wind power. The Commission noted that solar generation peaks during the day when demand is lower, while demand surges in the evening, creating the so-called ‘duck curve’ problem.</p>
<p>The Commission stated that battery energy storage systems are critical for storing surplus renewable energy and releasing it during peak demand periods, thereby improving grid stability and reducing reliance on expensive short-term market purchases.</p>
<p>It added that by eliminating the distribution companies’ reliance on spot-market pricing during peak hours and preventing the curtailment of renewable energy, battery storage aligns with prevailing market economics and directly safeguards consumers&#8217; financial interests.</p>
<p>The Commission rejected claims that the procurement process lacked transparency, noting that the bidding was conducted transparently, with 17 companies participating, and that it was followed by a competitive reverse auction.</p>
<p>APERC noted that the projects secure VGF of up to 30% of the capital cost or ₹2.7 million (~$29,138)/MWh. It held that the DISCOMs were warned that failing to sign the BESSA would result in NHPC withdrawing the VGF allocation. If the DISCOMs scrap this tender to pursue lower CAPEX in 2026, they will likely lose the 30% of the central subsidy.</p>
<p>However, APERC found that NHPC’s proposed ₹0.07 (~$0.0007)/kWh trading margin was unjustified, as the battery storage arrangement is primarily a capacity-based service rather than energy trading.</p>
<p>It added that as this is a standalone battery storage project procured purely on a capacity basis, applying the ₹0.07 (~$0.0007)/kWh margin would result in an exorbitant and unjustified administrative fee compared to the 0.5% capacity option.</p>
<p>The Commission ruled that the margin should instead be limited to 0.5% of the capacity charges, which better reflects the administrative role performed by NHPC.</p>
<p>Recently, APERC <a href="https://www.mercomindia.com/andhra-issues-draft-resource-adequacy-framework-for-reliable-power-supply" target="_blank" rel="noopener">issued</a> a draft framework for resource adequacy planning to ensure that electricity demand in the state is met reliably while maintaining an optimal mix of generation resources.</p>
<p>Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates </a>to ensure you don’t miss any critical updates from the renewable industry.</p>


Andhra Pradesh Regulator Approves 1 GWh Battery Storage Capacity Procurement

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