Shares of JSW Energy Ltd dropped by nearly 4% on January 6, following a significant setback in its renewable energy ambitions. The Central Electricity Regulatory Commission (CERC) has refused to adopt the proposed tariff for JSW’s 1 GWh Battery Energy Storage Systems (BESS) projects, citing misalignment with prevailing market prices.
Key Developments:
- Project Background:
- JSW Renew Energy Five Ltd, a subsidiary of JSW Energy, was awarded Letters of Award (LoAs) by SECI in January 2023 for developing 500 MW/1,000 MWh standalone BESS projects.
- The projects were expected to significantly enhance India’s energy storage capacity.
- CERC Decision:
- On January 2, 2025, CERC rejected the proposed tariff due to delays in SECI finalizing key agreements, including the Battery Energy Storage Purchase and Sale Agreements.
- The commission deemed the proposed tariff inconsistent with current market dynamics.
- Impact on JSW Energy:
- Analysts estimate a potential EBITDA loss of ₹550-600 crore for the company.
- The decision is also viewed as a broader negative signal for India’s renewable energy sector, particularly given the delays in signing Power Purchase Agreements (PPAs) for several SECI-run projects.
- Next Steps:
- JSW Renew Energy has announced plans to file an appeal against the CERC decision, aiming to resolve the tariff issue and move forward with the projects.
The stock is trading at ₹610.70, down by ₹23.70 or 3.74%, reflecting investor concerns over the regulatory setback and its impact on JSW Energy’s financials and renewable energy portfolio.
