Tanstransco gets nod to lease its substation land for battery energy storage projects

Tamil Nadu Transmission Corporation Ltd (Tantransco) has got the State power regulator’s nod for permitting “right of use” of its land and leasing the substation lands at ₹1 per project per year for the establishment of battery energy storage systems (BESS).

The Union Power Ministry has allocated 1000 Megawatt-hour (Mwh) of BESS capacity to Tamil Nadu under the State component of Viability Gap Funding (VGF) scheme, and Tamil Nadu Green Energy Corporation Ltd. has proposed a capacity of  500 MW/1000 Mwh on standalone BESS. 

In its petition before Tamil Nadu Electricity Regulatory Commission (TNERC), Tantransco proposed to execute the 1000 MWh of BESS under the State Component of VGF scheme in six substations, including Thennampatty,  Anuppankulam,  Ottapidaram,  Vellalaviduthi,  Kayathar and  Karaikudi with a total capacity of  500 MW/1000 MWh.

It proposed to implement the scheme under the “Build Own Operate” model, wherein the project is to be established in its substations under lease basis for a period of about 15 years.   Further, it is proposed to levy a lease rent of  ₹1 per project per year up to the lease period.

Viability Gap funding (VGF) of up to 30% of capital cost for BESS or ₹27 lakh per MWh, whichever is lower, shall be provided by the Central Government under the State Component, Tantransco said.

The assets of Tantransco that would be utilised for the development of BESS Projects are only the surplus land which is not otherwise required for undertaking licensed transmission activities, and accordingly, the activities of the transmission will not be affected, it said. 

“There will be no revenues out of the business conducted by utilization of the land for BESS Projects as the entire benefit of the activities is eventually accruing to the consumers and other users of the transmission system and the distribution system,” Tantransco said.

The Energy Storage System (ESS) plays a vital role in successfully integrating renewable energy into the grid and assisting grid operators in managing fluctuations in demand and renewable energy supply, it said.

Pumped Storage Systems (PSP) take a longer time for execution and implementation. BESS would be an ideal option for the near-term integration of renewable energy, especially while waiting for the completion of planned PSP capacity, as per the petition.

While giving the approval for the proposal, TNERC directed Tantransco to undertake a study of the grid connectivity and the technical feasibility.

It also directed Tantransco to execute a land lease agreement with the developers for a total period of 15 years by duly incorporating the terms and conditions for handing over the land back to Tantransco as it was handed over to the service provider for establishing the BESS.