Mumbai: The renewable energy industry has raised concerns about how an Andhra Pradesh power distribution company is setting up India’s largest energy storage project. In a letter to the Transmission Corporation of Andhra Pradesh Ltd (APTransco), the Independent Power Producers Association of India (IPPAI) has asked why APTransco is setting up the project without completing a detailed project report or encouraging a transparent bidding mechanism among players. Mint has seen a copy of the letter.

APTransco is looking to build India’s largest energy shifting project of 400-MW capacity with eight hours of daily discharge (that is, 3,200 megawatt hour or MWHr capacity), the country's first large-scale grid-connected energy storage project. An energy shifting solution is a storage solution that will shift energy from one time to another for peak load management during the day.

In a phone conversation with 'Mint', Harry Dhaul, director-general, IPPAI, said since it was the first, it was important to set the right precedent for the industry.

Initially, APTransco had proposed setting up a 250-500 MW system under an opex model, where the bidder would be selected through a competitive bidding process. The Andhra Pradesh Electricity Regulatory Commission directed APTransco to submit a detailed cost-benefit proposal for the proposed investment along with a detailed project report (DPR).

However, on 12 February, APTransco invited expressions of interest for a 400-MW system where the developer would be selected directly (under Section 62 of The Electricity Act 2003) instead of a competitive bidding process. In its letter, the IPPAI said it could lead to the discovery of sub-optimal tariffs.

“It is important that APTransco considers the consumer’s interest, not just in its own area but across the country, since it has taken the lead in this mega energy storage solution," according to the letter .

"APTransco seems to have gone ahead ignoring the regulatory commission’s directive (to submit a DPR) and is awarding the project to a party on a direct basis," according to Dhaul. "While we have no objection if it is awarded under Section 62, the question is how will you determine tariff and how will you charge for use of the system? The reason we are taking so much interest in this is because this will be among the largest such systems in the world and will lay down benchmarks in the whole country."

An email sent to K. Vijayanand, CMD, APTransco, did not elicit a response.

In March, 'The Hindu Business Line' reported that technical, commercial and financial terms and conditions of the EoI had not been spelt out and were “very sketchy". Several parameters such as response time, load cycle, number of charge and discharge cycles and the permission depth of discharge critical for design of the solution were missing from the EoI, it quoted a letter from Confederation of Indian Industry as saying.

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