Tata Power Delhi Distribution Limited (TPDDL) has signed an Rs1.5bn ($18.2m) deal with the Asian Development Bank (ADB) to enhance the Indian capital city’s power distribution through grid enhancements.

ADB will subscribe to non-convertible debentures valued at $18.2m issued by TPDDL.

The deal also includes a $2m grant to partially fund the purchase and integration of a pilot battery energy storage system (BESS).

Tata Power managing director and CEO Dr Praveer Sinha said: “The battery energy storage system plays a crucial role in building a resilient grid, and paves the way for a future-ready power distribution network.

“We thank ADB for administering this grant for the integration of the pilot BESS with TPDDL’s network. This will enable us to ensure a high-quality power supply for consumers, and help integrate clean energy into the power supply mix.”

The BESS grant is provided by Goldman Sachs and Bloomberg Philanthropies’ Climate Innovation and Development Fund (CIDF), and is administered by ADB.

With a 10MWh capacity, the BESS facility will be the first grid-scaled energy storage project in South Asia at the distribution transformer level.

It will help in storing electricity and supplying on demand and lowering grid instability, as well as offering flexibility to integrate irregular solar and wind energy resources.

TPDDL, a distribution arm of Tata Power, will use the senior financing to commission a new 66/11-kilovolt grid, as well as bolstering transformers, substations, feeder lines and switching stations.

It will also be used for the installation of smart meters, and the replacement of obsolete electrical equipment and meters.

ADB Private Sector Operations director general Suzanne Gaboury said: “Power distribution is a crucial link in the electricity supply chain and at times one of the most vulnerable.

“Mainstreaming a battery energy storage system at the distribution transformer level will better integrate renewable energy sources and contribute to a more disaster-resilient power distribution system for Delhi.

“As Asia’s climate bank, ADB supports India’s climate goals through innovative technologies and the catalysing of private capital to finance green projects.”