Indian Energy Storage Project Report: Low-Price Bidding Raises Economic Concerns

Indian Energy Storage Project Report: Low-Price Bidding Raises Economic Concerns; Only Half of Standalone Energy Storage Projects Demonstrate Feasibility in Model Assessment

 

A report titled "Levelized Cost of Energy Storage and Bidding Trends in India" published by Mercom India Research shows that, under modeling assumptions, only 50% of standalone battery energy storage system projects demonstrate positive economic viability, highlighting the ongoing cost challenges facing the industry. The report assessed projects auctioned between July and November 2025, examining actual energy storage costs, market conditions, and bidding trends related to fundamental project economics through analysis based on levelized cost of energy storage.

The report points out that cell cost, project size, storage duration, cycle conditions, and contract term are the driving factors for the levelized cost of energy storage. While energy storage has become a core component of India's clean energy plan, aggressive bidding behavior has raised serious questions about the economic viability of these projects. The report states that long-duration energy storage offers the lowest levelized cost of energy storage in Indian tenders. Between July and November 2025, 24 gigawatt-hours of energy storage tenders were issued, and 25.6 gigawatt-hours were auctioned, covering stand-alone battery storage systems and PV-plus-storage systems. The gradual increase in tendering activity led to price consolidation, with electricity prices stabilizing between 150,000 and 185,000 rupees per megawatt per month under the viability gap funding scheme.

 

 

 

As of June 2025, India's cumulative installed battery storage capacity reached 490 megawatt-hours, with PV-plus-storage projects constituting the majority of deployments. The project pipeline continues to expand rapidly, with nearly 74.8 gigawatts of storage-related capacity in various tendering stages by mid-2025. This growth includes ambitious grid level deployment of battery energy storage systems and 1 MW battery energy storage system configurations, which are increasingly common for utility-scale applications to provide grid stability, frequency regulation, and renewable integration.

 

Raj Prabhu, CEO of Mercom Capital Group, stated that aggressive bidding led by developers with limited experience in energy storage projects raises serious questions about the realism of their cost assumptions. When auction prices do not match the actual levelized cost of energy storage projects, the gap between bid prices and actual project costs will widen, increasing the risk of project delays and stalls, and undermining investor confidence in the auction framework.

 

Resources such as the Handbook on Battery Energy Storage System from organizations like the Asian Development Bank offer valuable guidance on technologies, business models, regulations, and best practices for evaluating and deploying BESS projects effectively. Specialized applications are also emerging, including hotel battery energy storage systems that help hospitality venues manage peak demand, reduce electricity bills, and ensure backup power during outages.

 

Companies like BLOOPOWER, a manufacturer specializing in LiFePO4-based solutions ranging from home and portable units to larger commercial and containerized BESS systems (including scalable options up to multi-MWh capacities), support this expanding market by delivering reliable, long-cycle-life battery technologies tailored for diverse deployments worldwide.