Kerala is a hydro-heavy state. Its grid leans on dams and run-of-river hydro plants, which gives it some natural flexibility that most solar- or coal-heavy states do not have. That is one reason Kerala came late to standalone batteries — for years, hydro did the balancing work. But rooftop solar is now spreading fast across the state, midday supply is getting cheaper while evening demand still peaks, and importing costly peak-hour power is a growing burden. Batteries — battery energy storage systems, or BESS — are how Kerala now plans to bridge that evening gap.
This piece walks through Kerala’s storage story in plain terms: what the policy actually says, who is buying storage, and how far along the programme really is.
Does Kerala have a dedicated BESS policy?
Honest answer: not yet, in the sense of a standalone battery subsidy scheme. Kerala has not notified a dedicated capital-subsidy policy for standalone BESS the way it once did for rooftop solar. Instead, storage is being pulled into the grid through two other routes — new regulations that create an obligation to hold storage, and direct procurement by the state and central agencies.
The regulatory direction comes from KSERC — the Kerala State Electricity Regulatory Commission, the body that sets tariffs and rules for the power sector. In November 2025, KSERC notified the KSERC (Renewable Energy and Related Matters) Regulations, 2025, which came into force on 6 November 2025, with the core mechanisms — net metering, banking and grid-support charges — applying from 1 January 2026.
The important part for storage is the Energy Storage Obligation (ESO). These regulations bring in an ESO alongside the older Renewable Purchase Obligation (RPO — the rule that forces buyers to source a slice of their power from renewables). Under the new rules, RPO and ESO compliance apply to distribution licensees, larger captive fossil-fuel users, and big open-access consumers. If you want the national picture behind this, our explainer on the Energy Storage Obligation in India covers how the central mandate flows down to states like Kerala.
Kerala’s broader goal, per KSERC, is to reach 50% of energy from renewable sources by 2030 — and it has estimated that roughly ₹522 billion (about $6 billion) of investment is needed by 2030 for the grid upgrades and renewable integration to get there. Storage is a named part of that plan.
Who is actually buying storage in Kerala?
This is where the programme gets concrete. Two agencies are procuring battery storage that KSEB — the Kerala State Electricity Board — will use.
Route 1: SECI (the central agency). The Solar Energy Corporation of India (SECI) ran a tender for a 125 MW / 500 MWh standalone BESS at the Mylatti 220 kV substation in Kasaragod district. It was a tariff-based competitive auction under the central Viability Gap Funding (VGF) scheme — VGF being a one-time central grant, worth up to about 40% of project cost, that lowers the tariff a state has to pay. The 500 MWh represented the full VGF slice earmarked for Kerala at the time. JSW Energy won it at a capacity charge of ₹4.41 lakh per MW per month. The battery sale agreement was signed on 10 April 2025, and the project is targeted for commissioning by around late September / October 2026 on a build-own-operate (BOO) basis, with KSEB as the 100% offtaker.
Route 2: KSEB’s own five projects. Separately, KSEB is developing five in-state battery projects with no upfront state capital, each backed by central VGF of about ₹27 lakh per million units (MU). Together these add up to 250 MW / 1,000 MWh, and KSERC has approved the power-sale agreements. Once live, they are designed to deliver 250 MW for four hours every day during evening peak.
The five KSEB projects at a glance
| Project | Location (district) | Size | KSERC approval | Target online |
|---|---|---|---|---|
| Mylatti | Kasaragod | 125 MW / 500 MWh | 31 Jul 2025 | Oct 2026 |
| Sreekantapuram | — | 40 MW / 160 MWh | 6 Aug 2025 | Oct 2026 |
| Pothencode | Thiruvananthapuram | 40 MW / 160 MWh | 6 Aug 2025 | 2026 |
| Areacode | Malappuram | 30 MW / 120 MWh | 6 Aug 2025 | 2026 |
| Mulleria | Kasaragod | 15 MW / 60 MWh | 6 Aug 2025 | 2026 |
All five are four-hour batteries (the MWh is four times the MW), a design squarely aimed at covering Kerala’s evening peak rather than fast-response grid services. That firm, dispatchable evening supply is the same job our peak-shaving solutions do for individual buyers.
Where pumped hydro fits in
Kerala’s storage plan is not only batteries. Because it is a hydro state, KSERC has recommended developing pumped storage projects (PSPs — essentially water pumped uphill and released to generate on demand) and redesigning some new small hydro schemes as open-loop pumped hydro. The regulator has also pushed for increasing pondage on run-of-river plants to give 48 to 72 hours of storage. KSEB has set aside a small budget line for detailed project reports on PSPs alongside its BESS spend.
The practical read: batteries handle the daily evening shift; pumped hydro is the longer-duration play the state is still studying. For a buyer or developer, that means near-term procurement action is on the battery side, where the tenders and approvals already exist. Kerala’s approach broadly tracks the national storage push described in our guide to India’s BESS policy and the 2032 storage target.
How Kerala compares — a quick reality check
| Point | Where Kerala stands |
|---|---|
| Dedicated standalone BESS subsidy | Not notified — storage rides on VGF and obligation instead |
| Storage obligation (ESO) | Introduced via KSERC’s 2025 renewable regulations |
| Live procurement | Yes — 5 KSEB projects + 1 SECI project, about 750 MW |
| Central VGF used | Yes — both the SECI project and the KSEB projects |
| Pumped hydro | Actively planned, still at study / DPR stage |
What this means for you
If you are a developer, EPC contractor, or supplier eyeing Kerala, three things matter. First, the money is coming through central VGF and KSEB offtake, not a standalone state grant — so track SECI and KSEB tenders, not a Kerala subsidy portal. Second, the design brief is four-hour, peak-shifting storage tuned to Kerala’s evening peak, which shapes the chemistry, cabinet and container sizing you should propose — see our standalone BESS solution and the wider product range for how that maps to real hardware. Third, the ESO under the 2025 regulations will slowly push large consumers and licensees toward holding storage, opening a commercial-and-industrial market beyond the big grid tenders.
If you want to size a project or estimate savings before committing, start with our BESS savings calculator, or talk to our team about matching a Kerala tender’s technical requirements to the right battery configuration.
Policies and tenders change by government notification — always confirm current terms before you commit capital.
Policy snapshot as of July 2026. State policy, tender terms and eligibility change by government notification; verify current provisions with KSEB / KSERC / Ministry of Power documents before financial decisions.