Hyderabad-based Bondada Engineering has received approval for credit facilities of ₹5 billion (~$55.01 million) from Canara Bank to fund the debt portion of its  200 MW/400 MWh standalone battery energy storage system (BESS) project with Tamil Nadu Green Energy Corporation (TNGECL).

Bondada is eligible for viability gap funding (VGF) of ₹1.08 billion (~$11.88 million) for this storage project. This project is expected to support enhanced grid reliability, deeper renewable energy integration, and efficient peak load management in Tamil Nadu.

Besides providing solar EPC solutions, the company is also active in the BESS space. Last November, it won 225 MW at a tariff of ₹164,000 (~$1,833.22)/MW/month in Transmission Corporation of Andhra Pradesh’s auction to develop 1,000 MW/2,000 MWh BESS.

Bondada also won two other auctions last year. It was among the winners of the Telangana Power Generation Corporation’s auction to set up 250 MW/500 MWh BESS. Bondada won 50 MW/100 MWh at a tariff of ₹240,347 (~$ 2,804.84)/MW/month.

In Tamil Nadu Green Energy Corporation’s auction to set up 500 MW/1,000 MWh BESS, the company won a capacity of 200 MW/400 MWh at a tariff of ₹246,000 (~$2,856.81)/MW/month.

Last June, the government announced ₹54 billion (~$631.30 million) for the second tranche of the VGF program to support the development of 30 GWh of energy storage. Funds will be sourced from the Power System Development Fund, which has a financial outlay of ₹54 billion (~$631.30 million).

VGF support and intense competition are sharply driving down bid prices in the energy storage system market. While VGF has reduced upfront project costs, it has also spurred aggressive bidding that may not fully reflect the actual levelized cost of storage, which represents the true lifecycle cost of storage assets. Experts warn that overly aggressive pricing in VGF-supported tenders could lead to execution challenges and performance risks over the project lifecycle.