Andhra discoms get APTEL relief in NHPC battery storage margin dispute

APTEL has declined to stay APERC's order capping NHPC's trading margin on a 500 MW battery storage project at 0.5 per cent of capacity charges instead of 7 paise per unit

The Appellate Tribunal for Electricity (APTEL) has rejected NHPC's interim plea against the Andhra Pradesh Electricity Regulatory Commission's (APERC) decision to slash its trading margin for battery energy storage system (BESS) projects, giving temporary relief to power distribution companies in the state.

 

In March this year, APERC had approved the procurement of 500 megawatt (MW)/1,000 megawatt-hour (MWh) battery energy storage system (BESS) capacity over a 12-year term. However, the regulator had also rejected NHPC's requested trading margin of 7 paise per unit of electricity and directed that it be capped at 0.5 per cent of capacity charges instead of a fixed volumetric charge. On Monday, APTEL declined to stay APERC's March order.

  

The storage capacity was planned to be spread across three substations — Jammalamadugu, Ghani and Kuppam. The project reportedly has viability gap funding support from the central government, covering up to 30 per cent of the capital cost, helping reduce the financial burden on consumers. The project was expected to be commissioned by early 2027.

 

According to reports, NHPC had expressed its unwillingness to go ahead with the project under the APERC-mandated rates and approached APTEL. According to NHPC, the margin was mutually agreed upon by APERC and NHPC, and this was followed by the signing of battery energy storage purchase agreements (BESPAs) in 2025.

 

On the other hand, discoms are of the view that the transaction was initially for the purchase and sale of contracted storage capacity rather than electricity. Hence, the applicable provision under the BESS guidelines was 0.5 per cent of capacity charges and not 7 paise per unit.