Background

Energy storage procurement in India has transitioned from limited pilot projects to grid-scale competitive tenders. The cumulative energy storage systems (ESS) tendered capacity increased from around 6.8 gigawatts (GW) in 2018 to approximately 90.7GW by 2025 (6). Procurement activity in 2025 showed a marked acceleration towards standalone ESS, making up over 71% of total ESS tender issuance, with standalone battery energy storage system (BESS) accounting for around 60% of this tendered standalone ESS capacity (7).

Standalone ESS auctions and tariffs in 2025

During 2025, 18 tenders totalling about 10.8GW of standalone BESS capacity were auctioned, of which nearly 10.4GW was allocated (7). The 2-hour, 2-cycle, 12-year configuration was the primary tender design type, accounting for 57% of the total allocated capacity (8). The lowest tariffs discovered for standalone ESS tenders were INR1.48 lakh/megawatt/month for the 2-hour storage durations and INR2.85 lakhs/MW/month for the 4-hour storage durations (7).

Standalone BESS tariff viability analysis

A key concern is whether the lowest winning tariffs are consistent with financially viable project delivery. For 2-hour 2-cycle auctions, tariffs are heavily skewed below the benchmark with roughly 75% of the total awarded capacity falling in the risky category (9). In contrast, the 4-hour, 1-cycle segment reflects a comparatively stronger viability profile, with around 67% of the capacity covered being viable (10). Tenders below 500MW show a significantly higher share of viable outcomes than those at or above 500MW (10). Furthermore, state agencies allocated the largest share of capacity, accounting for nearly 59% of the total allocated capacity, yet central agencies show stronger alignment with benchmark tariffs (11).

Execution risk evaluation

Between 2022 and 2025, average standalone BESS tariffs declined by 79.6%, whereas battery pack prices fell by 36.5%, indicating aggressive bidding (12). India’s reliance on imported cells, particularly from China, makes projects vulnerable to global supply chain disruptions (12). Furthermore, only 46.3% of the total 10,390MW allocated capacity was awarded to developers considered to have high standalone BESS execution readiness (13). Financial institutions expect an internal rate of return (IRRs) in the range of 15–20% for BESS projects, but margins in some recent awards may fall into the single-digit range (14).

Impact on sectoral development

These risks may lead to cumulative delays expected to remain in the range of nine to 18 months (15). The pressure to meet contractual obligations may lead to compromises in asset quality, particularly in projects allocated at tariffs significantly below benchmark levels (15). If not addressed, implementation delays could constrain the integration of renewables into India’s energy mix, thereby impacting the country’s broader target of achieving 500GW of renewable capacity by 2030 (16).

Future outlook

Recent auction outcomes are likely to prompt adjustments in procurement design, including the introduction of cost-reflective and market-aligned tariff floor levels, stricter eligibility criteria, and standardising bidding timelines (16). The need for a centralised framework for payment security mechanisms (PSMs) becomes more critical (17). The central government’s push for a strong BESS domestic manufacturing ecosystem involves initiatives like the Approved list of battery manufacturers (ALBM) and the National Critical Mineral Mission (NCMM) (18).

Conclusion

India’s battery energy storage ambitions are entering a decisive phase (18). In the near- to medium-term, supply chains are expected to remain largely dependent on China, but a gradual diversification of sourcing is likely to emerge alongside an evolution toward alternative battery technologies (18).