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MSEDCL Launches Tender for 2 GW/4 GWh Battery Energy Storage Projects with Viability Gap Funding Support

The Maharashtra State Electricity Distribution Company Limited (MSEDCL) has invited bids for the development of 2,000 MW/4,000 MWh (one-cycle) of Battery Energy Storage System (BESS) capacity across Maharashtra. The large-scale procurement aims to strengthen grid reliability, improve renewable energy integration, and support the state's growing electricity demand through advanced energy storage infrastructure.

The tender has been divided into two equal segments. Under Part A, developers will establish 1,000 MW/2,000 MWh of battery storage systems at substations owned by the Maharashtra State Electricity Transmission Company Limited (MSETCL) and MSEDCL. Part B covers another 1,000 MW/2,000 MWh, which may be developed as either co-located battery storage projects alongside existing renewable energy plants or as standalone State Transmission Utility (STU)-connected BESS facilities.

According to the Request for Selection (RfS), selected developers will receive Viability Gap Funding (VGF) of up to INR 18 lakh per MW, helping improve the financial viability of utility-scale battery storage projects and accelerate their deployment.

A notable feature of the revised tender is the retention of the requirement that MSEDCL should be able to utilize the battery storage systems for at least 6,300 charge-discharge cycles during the contract period without any additional cost. This provision follows a recent legal development in which the Appellate Tribunal for Electricity (APTEL) set aside an earlier version of MSEDCL's 2 GW/4 GWh BESS tender. The tribunal ruled that increasing the utilization requirement from 5,475 cycles to 6,300 cycles after the original bidding process represented a material change to the tender conditions and directed the utility to conduct a fresh bidding process.

Interested bidders are required to pay a non-refundable tender document fee of INR 29,500, along with a tender processing fee of INR 15 lakh plus applicable GST. In addition, bidders must furnish an Earnest Money Deposit (EMD) of INR 4.2 lakh per MW, while successful bidders will be required to submit a Performance Bank Guarantee (PBG) of INR 14 lakh per MW.

The deadline for bid submission is July 22, 2026, while the techno-commercial bids will be opened on July 23, 2026.

For both Part A and Part B, the minimum bid size has been fixed at 50 MW/100 MWh, with subsequent bid increments also required to be in multiples of 50 MW/100 MWh. The two segments will be evaluated independently during the bid assessment process.

Selected developers will sign a Battery Energy Storage Purchase Agreement (BESPA) with MSEDCL for a period of 15 years, ensuring long-term revenue visibility for project developers.

The tender also prescribes strict technical performance standards. Developers must guarantee minimum annual system availability of 95% and maintain an AC-to-AC round-trip efficiency of at least 85% on a monthly basis, ensuring reliable and efficient operation throughout the project lifecycle.

To promote domestic manufacturing and indigenous technology development, MSEDCL has mandated that the Energy Management System (EMS) application software used in the projects must be developed in India. In addition, developers must ensure a minimum local content of 20% of the total project cost, with the indigenous EMS software forming part of this localisation requirement.

From a financial eligibility perspective, bidders must demonstrate a minimum net worth of INR 70 lakh per MW, calculated either as of the close of the previous financial year or at least seven days before the bid submission deadline.

The tender reflects the growing importance of battery energy storage in India's evolving power sector. As renewable energy capacity continues to expand, large-scale BESS projects are becoming critical for balancing electricity supply and demand, managing peak loads, improving grid flexibility, and enabling greater integration of variable solar and wind power. The Government of India has also identified energy storage as a key pillar in achieving its target of 500 GW of installed non-fossil fuel-based electricity capacity by 2030, with Viability Gap Funding schemes designed to accelerate commercial deployment of grid-scale battery storage across the country.