GUVNL Issues India's Largest Battery Storage Tender Under New VGF Regime at 2 GW/4 GWh Capacity Gujarat Urja Vikas Nigam Ltd. (GUVNL) has released a tender for a 2,000 MW/4,000 MWh standalone Battery Energy Storage System (BESS) project, marking the largest tender seen so far under the new Viability Gap Funding (VGF) regime. 

The Phase VII BESS tender operates under a Build, Own, Operate (BOO) model with a 12-year tenure from the date of full commissioning. The tender represents a significant development in India's energy storage sector, with GUVNL offering a reduced VGF of Rs 18 lacs per MW compared to the previous regime. 

Despite the lower funding support, the tender is expected to generate strong market response and promises to set a benchmark for following tenders.

Project Infrastructure and Location Requirements

GUVNL has identified 12 substations within the state transmission network that can be considered for connecting the BESS projects under this tender. The proposed BESS installations will be connected to Gujarat Energy Transmission Corporation, including substations at Charanka, Shapar, and Bhogat, among others. 

The project mandate requires all BESS installations to be set up within Gujarat itself, which may reduce options for some bidders while increasing the likelihood of a solar-driven approach for the entire capacity. The scope of work includes the design, construction, and operation of the storage systems, encompassing all necessary infrastructure up to the delivery point as well as transmission line construction. 

Selected developers must also ensure compliance with metering and dispatch protocols issued by the state load dispatch center and GUVNL.

Financial Structure and VGF Distribution

The tender offers VGF of Rs 1.8 million per MWh of awarded capacity, distributed across three tranches: 20% at financial closure, 50% at commercial operation date (COD), and 30% one year after COD upon certification. 

Financial closure is expected within 9 months of signing the Battery Energy Storage Purchase Agreement (BESPA), with commissioning required within 18 months of financial closure. Bidders must furnish an earnest money deposit of Rs 500,000 per MW, along with a document fee of Rs 29,500 and a bid processing fee of Rs 1.5 million plus 18% GST per quoted project capacity. 

Successful bidders must submit a performance bank guarantee of Rs 1.25 million per MW. The winning bidders' range has been set at L1+ 2%, with winners identified through regular e-bidding followed by e-reverse auction process.

Technical Specifications and Performance Requirements

The minimum bid size is set at 50 MW/100 MWh, with bids required in multiples of 100 MWh capacity (50 MW x 2 hours). The entire system must be configured to operate with on-demand storage capability, designed for two full cycles per day. 

The BESS must be capable of charging and discharging at a C rate of 0.5. Selected bidders must ensure system availability of 95% on an annual basis, with round-trip efficiency of at least 85% on a monthly basis. 

Any efficiency below 70% will result in non-payment and liquidated damages at average power purchase cost rates, while efficiency between 70% to 84.99% will attract damages on excess losses. The annual degradation tolerance is set at up to 2.5%, with any shortfalls resulting in penalties of twice the agreed tariff.

Bidding Timeline and Qualification Criteria

The last date to submit bids is September 11, 2025, with bid opening scheduled for September 17, 2025. Bidders are expected to quote tariffs on a MW/month basis through the tender process. Bidders must have executed either conventional or renewable energy projects, with at least 1 MW of commissioned capacity for every 1 MW of BESS bid, or 10 MWh of commissioned BESS capacity. 

Financial qualification requires bidders to maintain a net worth of Rs 7.4 million per MW of quoted capacity, with consortiums required to meet equity contribution requirements in proportion to their participation. The scheduled commissioning date is set at 18 months from the effective BESPA date, with provision for an additional nine months under liquidated damages. 

Liquidated damages for commissioning delays will be calculated on a pro-rata basis by encashing the performance bank guarantee of Rs 1.25 million per MW, with full forfeiture for delays beyond nine months.