The Record Bids for 𝐑𝐕𝐔𝐍𝐋 𝟏𝟎𝟎𝟎𝐌𝐖/𝟐𝟎𝟎𝟎𝐌𝐖𝐡 𝐁𝐄𝐒𝐒 Tender And Its Aftermath

Now that the results of the RVUNL 1000MW/2000MWh bids are out, it might be time for industry to do a reality check on the direction India’s storage tenders are heading for. At the outset, it is thankfully obvious that all stakeholders are on board now with the urgency and role of storage for the next stage of India’s energy transition. Challenges are already being felt even at the  current levels of renewable generation in the grid, and by end customers. That makes it imperative for India to add storage at a fast pace, to avoid wastage (curtailment), ensure stability, and eventually, a long term power trajectory that slopes down, to truly deliver on the promise of clean and green energy.

RVUNL’s record Rs 1.77/kWh came through on the back of a huge response from bidders, despite reasonably tough conditions for supply. Each BESS system must be capable of two full charge and discharge cycles per day and maintain a minimum monthly availability of 95%.

48 firms qualified technically for the bids, with 28 choosing to participate after ceiling price was fixed at Rs 𝟐.𝟎𝟓𝐥𝐚𝐤𝐡/𝐌𝐖/𝐦𝐨𝐧𝐭𝐡.

𝟐𝟐𝐛𝐢𝐝𝐝𝐞𝐫𝐬 eventually came in under the psychological barrier of Rs 𝟐.𝟎𝟎𝐥𝐚𝐤𝐡/𝐌𝐖/𝐌𝐨𝐧𝐭𝐡, indicting just how the interest to enter the storage market is, and the belief in a wide section of the market on future trajectory of storage costs.

Tender Results

That the reverse auction eventually closed at the prices that it did is a clear indicator of not just demand, but also the pressure to get a foothold into the market with some projects to show for in many cases, precursors to larger ambitions no doubt.  The projects come with VGF support to be provided under the Power System Development Fund (PSDF) scheme and will be released in three phases: 20% upon financial closure with a bank guarantee, 50% at the commercial operation date, and the remaining 30% after the first year of operation.

Despite the seemingly unrealistic prices according to many, most of the players should be able to deliver, even if it involves taking a hit on margins. With a 𝐭𝐰𝐨 𝐲𝐞𝐚𝐫 window to 𝐞𝐱𝐞𝐜𝐮𝐭𝐞 it is obvious that many players have taken a calculated bet on future price trends as well as a better level of understanding and cost innovations domestically in their bids. 

With 11 winners , and no player other than Stockwell Solar winning a bid quantity over 100 MW, that seems clear  is that despite the seemingly unrealistic prices, most of the players should be able to deliver, even if it involves taking a hit on margins. 

As firms get down to execution, one can see a few risks the tender has created. A key one is of course is the higher risk and effort needed to close out PSA’s for previous storage tenders that are yet to find buyers. Secondly, larger tenders coming up, and those where bidding has not closed, will also be under pressure on the price front, with much bigger values at stake. It seems safe to say that this level of pricing is unlikely to be repeated for larger tenders for now, unless the key supplier market in China sends out clear signals of a further price correction. Those signals stopped sometime in August, and while no counter signals of an increase have established themselves, the situation could change as well. Especially for contracts to be executed post mid-2026. 

And then of course is the view that solar costs, the one reassuring factor in most bids, could start to climb at some stage, if the noises China has been making on a more ‘orderly’ solar sector in that country are followed by real measures that lead to price increases. Remember, some of the largest Chinese makers are ringing up losses and doing everything to staunch the same, including possible cartelisation of sorts to control further price drops across the value chain from polysilicon to modules.

One hopes Industry players do not go in with the usual belief that in numbers, they will have better negotiating ability to ask for further concessions or renegotiate terms.