In SECI’s storage tenders, the subsidy needs its own guarantee too

Kerala’s battery storage tender offered up to INR 1.35 billion of viability gap funding, a government grant, for its single 125 MW / 500 MWh project, and the winner had to lodge a bank guarantee for all of it before the first tenth was paid. At the funding’s cap, by our calculation, that guarantee is more than three times the INR 426.25 million performance guarantee on the same 500 MWh. It came on top of the performance guarantee, and the Solar Energy Corporation of India (SECI), which ran the tender, was to keep it until five years after commercial operation, although the last tranche of funding was scheduled for the end of the third year.^{1, 4} A bidder asked for the term to be cut to three years; SECI answered that the clause remained unchanged.²

SECI published that request for selection, its ESS-3 round, on 20 December 2024, and online bids closed on 10 February 2025; the winner would build, own and operate the battery under a 12-year agreement. The funding was capped at INR 2.7 million per MWh or 30% of capital cost, whichever was lower, and was payable in five tranches: 10% at financial closure, 45% at commercial operation and 15% at the end of each of the next three years, each only once SECI had received it from the Government of India. If the agreement ended within five years of commercial operation for reasons solely attributable to the developer, SECI could recover all the funding it had paid out, with interest at SBI’s one-year marginal cost of funds based lending rate (MCLR) plus 5%, by encashing the guarantee.^{1, 3, 4}

Against the INR 170.5 million of earnest money that went in with the bid, the guarantee comes to almost eight times as much. All but the first tenth of the grant was to arrive at or after commercial operation, so the construction had to be financed without it, while the guarantee for all of it had to be in place from financial closure and was to outlast the earnest money and the performance guarantee.^{1, 4}

Kerala also required two payments from the winner in cash. Success charges of INR 100,000 per MWh plus GST were due to SECI, half within 30 days of the letter of award and the rest before the agreement was signed. A payment security deposit of INR 500,000 per MWh was due before the first part of the battery was commissioned, credited in proportion to the capacity being commissioned at each stage and paid into the payment security fund SECI maintains for the project; how the deposit would operate was left for SECI to notify later.¹ Asked when the deposit would be returned, SECI replied in its clarifications that it is non-refundable, and requests to drop it or make it refundable left the clause as it was.²

On our arithmetic, 500 MWh puts the deposit at INR 250 million and the success charges at INR 50 million before GST. Whatever its name, a deposit that is never returned is a cost the bid has to carry. Odisha asked for no such deposit: under its standard agreement, GRIDCO, the buyer that signs the agreements there, was to set up the payment security fund itself and open a letter of credit for the developer’s bills at its own cost. The only developer money that agreement sends into its payment security mechanism is the charge, INR 1,000 plus GST per day per MW, for extra time to reach financial closure, refunded pro rata if the battery is commissioned on schedule.^{1, 4, 5}

SECI’s Odisha round, run for GRIDCO and published on 18 December 2025 with online bids closing on 5 February 2026, treated the subsidy guarantee differently. Its viability gap funding, capped at INR 1.8 million per MWh under the Ministry of Power’s scheme supported through the Power System Development Fund, was payable in three tranches: 20% at financial closure, 50% at commercial operation and 30% after the first year of operation. Odisha asked for security only against money about to be paid: before each release, a bank guarantee or insurance surety bond equal to that release, with none for the last tranche. Amendment-01 allowed it to be given in two parts, and the guarantee for the funding sanctioned up to commercial operation was to be returned one year after that date. GRIDCO’s right to recover the funding by encashing the guarantee, with the same interest as in Kerala, covers a termination solely attributable to the developer within two years of commercial operation.^{1, 4, 6, 7}

On one of Odisha’s 20 MW / 80 MWh projects, the funding comes to up to INR 144 million on our arithmetic, with at most INR 100.8 million under guarantee at any time, the 70% paid by commercial operation, against a performance guarantee of INR 45 million. Where Kerala’s guarantee ran ahead of the money, Odisha’s followed it: the developer was never to guarantee more than it had been paid or was about to receive, and only until one year after commercial operation rather than five.^{1, 4}

A further clause looks as far ahead: a buyer of the project within those two years must re-issue the guarantee “corresponding to the amount applicable”. The document does not say which guarantee covers the second year, once the one for the funding up to commercial operation has been returned.⁴

Source: each request for selection, Odisha’s as amended by its Amendment-01, Kerala’s clarifications and Odisha’s standard agreement, at the clauses listed for each in the sources below.^{1, 2, 4, 5, 7}

Kerala set its securities and its net-worth test per megawatt-hour of storage, and Odisha per megawatt of power: earnest money of INR 341,000 per MWh against INR 900,000 per MW, a performance guarantee of INR 852,500 per MWh against INR 2.25 million per MW, and a minimum net worth of INR 3.41 million per MWh against INR 9 million per MW. The same printed figure buys different amounts: success charges of INR 100,000 were set per MWh in Kerala and per MW in Odisha, which across each round’s 125 MW / 500 MWh comes to INR 50 million against INR 12.5 million, in rounds published a year apart.^{1, 3, 4, 6, 7}

Both rounds bought four-hour batteries: Kerala’s was to be designed to discharge for at least 4 hours at rated power, and Odisha’s six projects added up to 125 MW × 4 hours. Because each round fixed the duration, the choice of unit made no difference inside either round. It matters across documents: an amount set per megawatt-hour grows with every hour of storage, one set per megawatt does not. Kerala’s own net-worth clause illustrates its rate with a 100 MW battery storing two hours. On that battery, by our arithmetic, Kerala’s earnest money would be INR 68.2 million at two hours and INR 136.4 million at four, while Odisha’s per-MW rate gives INR 90 million at either; the rates come from rounds a year apart, so the point is how each amount moves, not which is higher.^{1, 4, 7}

Odisha’s own request for selection shows how much can ride on the word. It gave the deposit per MW in its bid information sheet and in the figure of its earnest-money clause, but per MWh in the amount in words, until SECI’s Amendment-01 of 23 January 2026 corrected the words to per MW. On a 20 MW / 80 MWh project, that is INR 18 million read per MW and INR 72 million read per MWh. Its net-worth clause carries the same slip, a rate per MW “of the quoted capacity (in MWh)”, which Amendment-01 left as it was; only the clause’s own example calculates it per MW.^{4, 7}

Neither document asked for a record of past projects: in both, the clause that would set a technical experience threshold reads “Not used”. A bidder other than an alternative investment fund could meet the financial tests on an affiliate’s strength, but the affiliate then had to undertake, by board resolution, to put in the equity and the performance guarantees if the bidder did not. Qualification came down to financial strength, whoever’s balance sheet supplied it.^{1, 4}

In Kerala the winner could sign through a project company, provided its own shareholding there, or a consortium’s combined holding, stayed at 51% or more until commercial operation, unless a listed company set up the project. In both rounds a foreign company could bid on its own, but if it won alone it had to set up an Indian subsidiary under the Companies Act, 2013, holding at least 51% of it, before signing, and comply with India’s rules on foreign direct investment.^{1, 4}

Odisha’s Amendment-01 added a minimum local content of 20% of the total project cost in battery procurement, with an undertaking from each bidder. In that undertaking the bidder accepts that failing to comply with the Ministry of Power’s order behind it makes it liable to have the viability gap funding withheld. In Odisha, then, the developer had to guarantee the funding and could still have it withheld over the local content of its battery purchases.⁷

ListingMinds, “In SECI’s storage tenders, the subsidy needs its own guarantee too”, 3 October 2026, updated 22 October 2026. https://www.listingminds.com/energy/field-notes/reading-a-storage-tender-from-the-back