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India's latest battery storage bids have dropped to record-low levels, raising questions about whether these projects can be built and operated safely or profitably. Industry experts say the aggressive pricing trend may lead to low-quality technology, stalled execution, and increased safety risks, especially in high-temperature regions. While the country has tendered 83 GWh of storage capacity since 2021, only 36 GWh has been awarded so far, leaving a major gap compared to its long-term requirement. Analysts also noted that some winning bidders are attempting to sell projects for a premium rather than developing them, adding to concerns about viability.
Industry experts and analysts are expressing concern as battery energy storage bids in India touched record-low levels over the past week. The sharply reduced tariffs have raised fears about whether developers can deliver these projects safely and at financially sustainable costs, potentially slowing India's broader push for renewable power integration. Advertisement
Battery storage is central to India's plan to expand renewable energy capacity to 500 gigawatts by 2030. Grid operators have been curtailing excess power generation, making energy storage a key requirement to stabilize supply. Since 2021, the country has tendered 83 GWh of storage capacity, although the pace remains slower than needed. According to the India Energy Storage Alliance (IESA), India requires around 236 GWh of storage capacity by 2032.
Out of the 83 GWh tendered so far, about 36 GWh has been awarded, 15.4 GWh remains under active bidding, roughly 18 GWh is under construction, and close to 8 GWh worth of projects has been cancelled. Despite these efforts, coal continues to dominate the country's power mix, with analysts suggesting it is likely to remain the key source for another decade, prompting projections of additional coal-based capacity beyond 2035.
IESA data shows that by the end of September, India had only 500 MWh of operational battery storage systems, highlighting how early the sector still is in terms of deployment.
Industry professionals say the recent tariff race has created structural risks. Debmalya Sen, president of IESA, noted that the competition to offer the lowest possible tariffs is undermining the sector, explaining that tenders without technical eligibility requirements have opened doors for companies from unrelated sectors such as real estate and food processing. He observed that established players are increasingly stepping back from these bids.
Recent tenders in Rajasthan have seen bids fall below INR 1.5 per kWh, as reported by industry data. Energy consultant Vivek Bharadwaj described such pricing as highly unrealistic, pointing out that it is nearly one-third of what he considers a viable benchmark. He explained that fixed costs typically range between INR 2 and INR 2.2 per unit, and once charging costs are added, delivered power usually reaches around INR 4.5 per unit.
Government officials have acknowledged the volatility. Power Secretary Pankaj Agarwal said that policy support mechanisms for storage are under regular review. He also noted that some bids around INR 3.80 per kWh appear workable, although he did not share details of possible policy adjustments.
Experts warn that abnormally low tariffs may result in the use of cheaper, lower-grade batteries with shorter service life. Sen stated that such conditions push developers toward low-cost cells, which carry higher risks in India's high-temperature climate. Safety concerns around lithium-ion storage systems have been highlighted globally after several incidents in China, Japan, South Korea, and the United States.
Another worrying trend is emerging around project flipping. Bharadwaj said he is advising two companies that have won storage tenders but have no intention of constructing the facilities. Instead, they are seeking to sell their awarded projects at a premium, turning the process into a financial transaction rather than a development exercise. He warned that this approach could leave banks exposed to future non-performing assets if these projects do not progress.
IESA has been in discussions with the power ministry to strengthen tender rules by introducing technical eligibility criteria and stricter performance benchmarks. The industry body is also advocating a phased structure for domestic manufacturing incentives, including stepwise increases in basic customs duties and focused support for cell manufacturing.
Source Reuters
5th Jun, 2025
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