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					</table>Bid prices in the battery energy storage system (BESS) market are <a href="https://www.mercomindia.com/vgf-lcos-and-the-changing-economics-of-battery-storage-in-india" target="_blank" rel="noopener">declining</a> sharply, driven by viability gap funding (VGF) support and intense competition. While VGF has reduced upfront project costs, it has also spurred aggressive bidding that may not fully reflect the actual levelized cost of storage (LCOS), which represents the true lifecycle cost of storage assets.
Prostarm Info Systems <a href="https://mercomindia.com/prostarm-wins-south-eastern-railways-2-mw-rooftop-solar-auction" target="_blank" rel="noopener">won</a> South Eastern Railway’s auction to set up 2.059 MW rooftop solar systems under the Santragachi division in Howrah, West Bengal. Prostarm won the project at a contract value of ₹134.3 million (~$1.48 million). The tender was floated in November 2025.
The Ministry of New and Renewable Energy <a href="https://mercomindia.com/solar-module-capacity-under-almm-jumps-to-162-gw" target="_blank" rel="noopener">expanded</a> the Approved List of Models and Manufacturers (ALMM) by adding 17,268 MW of solar module capacity. The cumulative module manufacturing capacity under ALMM now stands at 162,109 MW.
The Bihar Electricity Regulatory Commission <a href="https://www.mercomindia.com/bihar-approves-procurement-of-190-mw-peak-power-from-hybrid-projects" target="_blank" rel="noopener">approved</a> a proposal by Bihar State Power Holding Company to procure 190 MW of assured peak power supply through an interstate transmission system–connected wind–solar hybrid project with a co-located BESS under the Solar Energy Corporation of India’s hybrid tranche-VI program.
The Andhra Pradesh Electricity Regulatory Commission <a href="https://mercomindia.com/andhra-pradesh-directs-monthly-energy-settlement-for-rooftop-solar-consumers" target="_blank" rel="noopener">directed</a> all power distribution companies (DISCOMs) in the state to implement monthly energy settlement and billing for solar rooftop prosumers with immediate effect. The Commission has also directed DISCOMs to ensure that payments for excess energy exported to the grid are made through electronic transfer, in line with existing regulations.
India’s commercial and industrial (C&amp;I) renewable energy market is <a href="https://www.mercomindia.com/solar-open-access-primary-growth-engine-for-ci-units-in-india-interview" target="_blank" rel="noopener">undergoing</a> a structural transition, with distributed solar growing beyond rooftop installations toward larger green open-access projects. Rising electricity costs, corporate decarbonization targets, and the need for long-term cost visibility are pushing C&amp;I consumers to reassess how they procure clean power.
West Bengal State Electricity Distribution Company <a href="https://www.mercomindia.com/west-bengal-floats-tender-for-20-mw-100-mwh-solar-plus-bess-project" target="_blank" rel="noopener">invited</a> bids for the design, engineering, supply, construction, and commissioning of a 100 MW solar power project with a 25 MW/100 MWh BESS at Goaltore in the Paschim Medinipur district of West Bengal (Phase II).
The West Bengal Green Energy Development Corporation <a href="https://www.mercomindia.com/west-bengal-floats-tenders-for-3-mw-rooftop-solar-bess-projects" target="_blank" rel="noopener">issued</a> three engineering, procurement, and construction tenders for setting up grid-connected rooftop solar projects with BESS, with a cumulative capacity of 3 MW, at government poultry farms in Coochbehar, Malda, and Nadia districts.
India <a href="https://mercomindia.com/transmission-line-additions-in-9m-fy-2026-meet-less-than-half-the-target" target="_blank" rel="noopener">achieved</a> 5,077 circuit kilometers (ckm) of power transmission lines between April and December in the financial year (FY) 2025–26, accounting for 47.5% of the cumulative target of 10,696 ckm set for the period, according to Central Electricity Authority data.
UJVNL, a Government of Uttarakhand undertaking, <a href="https://www.mercomindia.com/uttarakhand-invites-bids-to-set-up-16-mw-40-mwh-bess-in-haridwar" target="_blank" rel="noopener">floated</a> a tender to set up a 16 MW/40 MWh BESS at the Pathri substation and hydroelectric project in Uttarakhand’s Haridwar district. The projects will receive viability gap funding support. Bids must be submitted by March 5, 2026. Bids will be opened on March 7.
Mumbai-based Radiance Renewables, a clean energy firm backed by Eversource Capital, <a href="https://mercomindia.com/radiance-renewables-raises-100-million-from-danish-fund-fmo" target="_blank" rel="noopener">raised</a> about $100 million in equity funding from two major international investors — Impact Fund Denmark and the Dutch entrepreneurial development bank FMO. Impact Fund Denmark and FMO are investing $50 million each.
Tamilnadu Petroproducts will <a href="https://mercomindia.com/tamilnadu-petroproducts-to-procure-13-2-mw-of-solar-power-from-zelestra-spv" target="_blank" rel="noopener">procure</a> approximately 13.2 MW of solar power from Navia Three Power (NTPPL), a special-purpose vehicle (SPV) of renewable energy solutions company Zelestra, as a captive consumer.
Utility-scale energy storage firm Fluence Energy <a href="https://www.mercomindia.com/fluence-energys-revenue-jumps-154-to-475-2-million-in-q1-fy2026" target="_blank" rel="noopener">recorded</a> revenue of $475.2 million, an increase of approximately 154.4% year-over-year (YoY), in the first quarter (Q1) of the FY 2026. The company recorded a net loss of $62.6 million, compared with approximately $57 million in the same quarter last year.
Microinverter and battery storage supplier Enphase Energy <a href="https://www.mercomindia.com/enphases-q4-2025-revenue-down-on-softening-us-europe-demand" target="_blank" rel="noopener">reported</a> revenue of $343.32 million for Q4 of 2025, down 10.29% YoY from $382.71 million. The revenue, however, in Q4 surpassed analysts’ expectations by $3.2 million. The company’s Q4 revenue included $2.3 million of safe harbor revenue.
AusEnergy Services <a href="https://www.mercomindia.com/australia-awards-12-gwh-of-long-duration-storage-battery-projects" target="_blank" rel="noopener">awarded</a> six new long-duration energy storage battery projects totaling 1.17 GW/11.98 GWh under the sixth round of the New South Wales Electricity Infrastructure Roadmap.
Philippines-based renewable energy company ACEN Renewables International, a subsidiary of ACEN Corporation, <a href="https://www.mercomindia.com/acen-consolidates-joint-venture-with-upc-renewables-takes-100-ownership" target="_blank" rel="noopener">consolidated</a> its joint venture (JV) with UPC Renewables, taking 100% ownership of the JV. Through this acquisition, ACEN will add 819 MW of renewable energy projects to its India portfolio, comprising three projects under construction and at advanced stages of development in Rajasthan and Karnataka.
The board of directors of government-owned lender, Indian Renewable Energy Development Agency (IREDA), <a href="https://www.mercomindia.com/iredas-board-approves-fundraise-of-%E2%82%B929-94-billion-through-qip" target="_blank" rel="noopener">approved</a> a fundraise of ₹29.94 billion (~$330.14 million) through a qualified institutions placement.

Daily News Wrap-Up: The Role of VGF and LCOS in India’s BESS Transition

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					</table>Aggressive bidding is rapidly becoming the defining feature of India’s energy storage tender landscape, raising concerns among stakeholders.
As competition intensifies and tender volumes rise, discovered tariffs for battery energy storage systems (BESS) have converged sharply, raising a critical question for the sector: are today’s prices truly reflective of bankable projects, or are they setting the stage for long-term instability?
Between July and November 2025 alone, around 24 GWh of energy storage tenders were issued, while 25.6 GWh were auctioned, spanning both standalone BESS projects and solar-plus-storage configurations.
This steady uptick in tendering activity has coincided with increasing price pressure, particularly under the Viability Gap Funding (VGF)-linked framework, where tariffs have largely settled in the range of ₹150,000 (~$1,635)–₹185,000 (~$2,017)/MW per month.
While these numbers point to rapid market maturation, industry insiders emphasize the growing concerns around economic viability and execution risk.
Factors Driving Increasingly Aggressive Bids
Several structural shifts have reshaped India’s storage tender ecosystem, pushing bidders toward tighter pricing. The introduction of VGF for standalone BESS has significantly lowered the perceived entry barrier, attracting a wider pool of developers, engineering, procurement, and construction (EPC) companies, and new market entrants.
Kishor Nair, Chief Executive Officer at <a href="https://avaada.com/" target="_blank" rel="noopener">Avaada Energy</a>, said, “The jump to ~25 GWh auctioned in a short window has fundamentally changed bidder psychology. Once volumes move from pilot scale to systemically meaningful size, developers begin bidding not just for a project, but for portfolio positioning. Standardised VGF-linked tender documents, fixed availability structures, and assured offtake have induced downside, encouraging more aggressive bidding.”
According to him, the initial days of falling lithium-ion battery prices and improving lifecycle assumptions have created a myth in the industry that costs will take care of themselves. However, India still lacks large-scale, multi-year operating data under grid conditions (high temperatures, cycling profiles, auxiliary losses). “The rising trend of battery prices is a major risk for the Indian market, which is solely dependent on the import of key components for BESS.”
The surge in tender frequency has further intensified competition. With developers eager to secure early scale and long-term pipelines, many bids are driven as much by strategic positioning as by near-term returns.
Economic Viability
On paper, today’s winning tariffs can work, but only under very specific conditions. Projects remain viable if battery procurement prices are locked at assumed levels, financing is secured at competitive rates, augmentation requirements are accurately provisioned for, and commissioning timelines are met without delay.
Nair said that for new entrants, multiple strategic market objectives include securing a first-mover reference project, building execution credentials ahead of larger future tenders, accessing the capital market to raise equity through an IPO, gaining preferred-vendor status with policymakers and lenders, and scouting for land, connectivity, or long-term grid access.
The challenge is that margins at these tariff levels are extremely thin. Even modest deviations, such as higher interest during construction, unexpected supply-chain delays, or penalties for shortfalls, can quickly undermine project economics.
A top executive from a leading power generator said, “Concerns were raised over how developers can maintain viable Internal Rate of Return (IRR) and sound project models under such compressed pricing. India’s BESS expansion should prioritize reliability and long-term value rather than a price war.”
“Similar to Rajasthan’s Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan (PM-KUSUM) project cancellations, the unrealistic bidding could risk similar setbacks if not grounded in realistic cost structures. Some of the current bids appear financially stretched, though future declines in global battery prices could improve feasibility. The overall sentiment remains one of cautious optimism, with the market waiting to see how these bids perform in execution,” he added.
Echoes of Early Solar, Wind Auction Cycles
The current storage bidding trend closely mirrors earlier phases of India’s solar and wind auctions. Aggressive price discovery initially accelerated deployment and established global benchmarks, but was followed by project delays, renegotiations, and a gradual elimination of weaker players.
The key difference is that energy storage is inherently more complex than standalone renewable generation assets. Battery degradation, thermal management, safety compliance, and real-time performance obligations introduce layers of operational risk that are difficult to capture in early-stage financial models designed to analyze the projects.
As a result, the gap between bid assumptions and ground realities can be significantly wider than in vanilla renewable projects.
Pointing to key similarities between BESS projects and the initial boom of solar and wind projects, Nair emphasized that these include race-to-the-bottom pricing driven by balance-sheet strength rather than asset-level returns, overconfidence in execution timelines rather than supply chain constraints, and the entry of players without deep EPC or O&amp;M experience, relying heavily on subcontracting and original equipment manufacturer information.
It’s not just standalone BESS projects that are witnessing aggressive bidding and tariff reductions; the same holds true for solar-plus-BESS projects over the last few years.
Solar Plus BESS Tariffs
The tariffs have fallen significantly for solar-plus-BESS projects. Tariffs for standalone as well as solar-plus-BESS projects have fallen significantly over the last few years, with the lowest ever tariff of ₹2.7 (~$0.029)/kWh <a href="https://www.mercomindia.com/acme-and-ceigall-win-rumsls-600-mw-solar-plus-storage-auction" target="_blank" rel="noopener">discovered</a> in Rewa Ultra Mega Solar’s 600 MW solar with BESS auction in September last year.
This gives a broader view of things to come, as solar/wind plus BESS projects will take the lead in the near future. But how far this optimism will sustain is anybody’s guess.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-89903 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2.png" alt="Aggressive Bidding Puts India’s Energy Storage Push at Crossroads" width="703" height="512" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2.png 703w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2-300x218.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2-650x473.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2-624x454.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2-600x437.png 600w" sizes="auto, (max-width: 703px) 100vw, 703px" /></a>
As of June 2025, the total installed battery storage capacity stood at 490 GWh, with solar plus storage accounting for the bulk of the deployments, according to the ‘Levelized Cost of Storage (LCOS) and Bidding Trends in Indian Energy Storage Projects’ report released by <a href="https://www.mercomindia.com/research" target="_blank" rel="noopener">Mercom India Research</a>.
Will the Market Self-Adjust?
Selective regulatory refinement may be necessary to avoid repeating past boom-and-bust cycles. Stronger pre-qualification criteria, clearer definitions around degradation and augmentation, and stricter enforcement of performance standards could improve bid quality without dampening competition.
Laying down the markers for the BESS market, Nair said that a partial self-correction is likely. A few developers have already begun to face the reality, but some regulatory intervention would definitely help avoid systemic risk.
Market forces will eventually penalize undercapitalized or inexperienced bidders and push lenders to demand higher equity buffers and higher interest rates for such unrealistic projects. This, in turn, would lead to consolidation through asset sales or restructuring. Market watchers say the goal should not be price control, but risk transparency and execution discipline.
The Path Forward
In the future, India’s energy storage tender ecosystem will need to evolve beyond pure price discovery. Incorporating performance-linked evaluation metrics and enabling constant revenue streams can help balance affordability with financial sustainability.
Highlighting the need for a mature ecosystem, Nair noted that the ecosystem would likely feature differentiated tenders and separate products for peak shaving support, renewable firming for RE-RTC, and grid ancillary services.
This allows pricing to better reflect the actual value delivered.
Calling for performance-based revenue structures, he said the ecosystem should move beyond fixed availability to include cycle efficiency, response time, degradation-adjusted output, and stronger domestic supply chains with the support of an ALMM-like framework.
Energy storage is a critical pillar of India’s energy transition and a strategic priority for the Government of India. Unlike early solar and wind projects, energy storage is at an inflection point, with significantly higher technical complexity and lifecycle risks, making execution failures at this stage potentially consequential.

Aggressive Bidding Puts India’s Energy Storage Push at Crossroads

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					</table>In recent standalone battery energy storage system (BESS) auctions, several companies have won projects at tariffs below the levelized cost of storage (LCOS), signaling an increasingly aggressive bidding environment.
At such low tariffs, there is a fear that projects may become unviable.
Industry insiders say some bidders have secured projects by hedging against a future decline in BESS prices, betting that projects will become viable at lower tariffs over time. This trend of underbidding has become more pronounced, with tariffs in a free fall.
In 2025, the lowest tariff for standalone BESS projects <a href="https://subscription.mercomindia.com/lowest-energy-storage-auction-tariffs-in-2025" target="_blank" rel="noopener">declined</a> to ₹148,000 (~$1,611)/MW/month, a 35% drop from ₹225,985 (~$2,460)/MW/month in the previous year.<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/underbid1.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-89758 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/underbid1.png" alt="" width="840" height="511" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/underbid1.png 840w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/underbid1-300x183.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/underbid1-768x467.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/underbid1-650x395.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/underbid1-624x380.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/underbid1-600x365.png 600w" sizes="auto, (max-width: 840px) 100vw, 840px" /></a>
According to Mercom India Research’s <a href="https://www.mercomindia.com/product/indian-energy-storage-projects" target="_blank" rel="noopener">LCOS and Bidding Trends in Indian Energy Storage Projects</a> report, only 50% of the standalone BESS projects evaluated in a recent industry survey demonstrated positive project economics and viability under modeled assumptions.
LCOS represents a BESS project’s lifetime costs relative to the total energy discharged over its operational life.
Why LCOS Matters
With aggressive underbidding shaping the BESS market, LCOS offers critical clarity for developers assessing project viability. Industry watchers note that such underbidding is typical of an early-stage market, a pattern previously observed in India’s solar sector a decade ago.
According to Anil Rajanna, CEO and Co-founder at <a href="https://elektronre.com/" target="_blank" rel="noopener">Elektron RE</a>, LCOS can help developers evaluate capital expenditures, operational expenditures, and the overall project life.
Unlike the now-mature solar market, the BESS sector remains highly volatile, making it difficult to assess project economics based solely on auction tariffs. While tariffs often reflect forward-looking assumptions and risk-taking, LCOS provides a more comprehensive and realistic assessment of project fundamentals.
It is worth noting that a significant number of recent BESS auction winners came from non-BESS or non–power-generation sectors, highlighting broader interest among companies seeking to diversify into energy storage.
Industry players attribute this rising interest to two key factors: relatively lower lithium battery and energy storage prices observed a quarter ago, and the fact that capital expenditure accounts for nearly 60–65% of a standalone BESS project’s total cost.
However, they caution that such aggressive bidding could distort project economics, particularly for companies entering the energy storage sector without prior experience.
Pramod MJ, Assistant General Manager (BESS) at a BESS solutions company, believes that while LCOS is a more accurate viability indicator for standalone BESS projects at the project level, investors continue to focus on metrics such as internal rate of return and net present value.
Why Underbidding?
Developers largely attribute the underbidding trend to the sharp decline in BESS prices witnessed last year.
Explaining the pricing trajectory, Pramod said battery prices remained stable till May 2025 before falling from around $60/kWh–$63/kWh to nearly $50/kWh, with some transactions reportedly as low as $53/kWh.
He added that developers took forward-looking bets, factoring in declining battery prices and the typical 18-month project execution window.
Ishan Nagpal, AVP (Regulatory, Bidding and Commercial) at <a href="https://sunsure-energy.com/" target="_blank" rel="noopener">Sunsure Energy</a>, cited low entry barriers as another key reason for underbidding. “Recent BESS auctions allowed micro, small, and medium enterprises to participate without requiring bank guarantees.”
He warned that such tariffs could undermine the tendering process, adding that some projects may never reach execution.
Pramod also highlighted that the rental model adopted for standalone BESS projects offers limited scope for independent power producers (IPPs) to create value, which helps explain the absence of established BESS players among recent auction winners.
However, developers do not expect underbidding to continue indefinitely. They say BESS prices have begun trending upward, posing challenges for IPPs that secured projects at aggressively low tariffs. Some developers anticipate a waiting period for battery prices to stabilize, which could delay project execution timelines.
Explaining the recent reversal in battery price trends, Rajanna said that until last quarter, China had been subsidizing battery original equipment manufacturers through nearly 9% rebates for both domestic consumption and exports.  The rebate has since been reduced to 6%, effective April 1, 2026, and is expected to be phased out entirely by January 2027.
He also pointed out that lithium prices have surged by over 100% in the last eight weeks, while supply-demand imbalances have further contributed to a bullish outlook for BESS prices.
Calls for Market Correction
Industry experts are urging tendering agencies to ensure that tariffs determined through auctions remain feasible and reflect underlying costs.
Nagpal called for stricter quality criteria in BESS tenders to ensure participation is limited to serious and capable players, warning that unchecked underbidding could jeopardize the sector’s long-term credibility.

Underbidding in Battery Energy Storage Auctions Raises Questions Over Project Viability

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					</table>Only 50% of the standalone battery energy storage system (BESS) projects <a href="https://www.mercomindia.com/is-aggressive-bidding-distorting-the-economics-of-energy-storage-projects-in-india" target="_blank" rel="noopener">evaluated</a> in a new industry survey showed positive project economics and economic viability under modeled assumptions, highlighting the continuing cost challenges facing the industry sector, according to the ‘Levelized Cost of Storage and Bidding Trends in Indian Energy Storage Projects’ report released by Mercom India Research.
Thirty companies <a href="https://www.mercomindia.com/solar91-nithin-sai-ravindra-energy-among-winners-of-hescoms-483-mw-solar-auction" target="_blank" rel="noopener">won</a> Hubballi Electricity Supply Company’s (HESCOM) auction to commission 80 solar power projects totaling 423.7 MW, along with their associated 11 kV lines and remote monitoring systems under the RESCO mode. The successful bidders include Sri Srinivasa Constructions, Ravindra Energy, Solar91 Cleantech, Nithin Sai Constructions, Mahaveer Electro Mech, G G Anandswamy Gaddadevarmath, Savio Bio Organic and Fertilizers, Shri Mallikarjun Petroleum, Anil Patted Solar Energy, and Lovedales Edutech.
In a major relief for the renewable energy sector, the Ministry of New and Renewable Energy <a href="https://www.mercomindia.com/mnre-extends-timelines-for-renewable-energy-projects-hit-by-gib-case#:~:text=The%20time%20extension%20will%20be,Court%20delivered%20its%20final%20judgment." target="_blank" rel="noopener">approved</a> time extensions for projects delayed due to the prolonged case in the Supreme Court over power transmission lines in the Great Indian Bustard areas of Rajasthan and Gujarat. The time extension will be calculated from the later of the date on which the developer applied for approval under Section 68 of the Electricity Act, 2003, or March 21, 2024, up to December 19, 2025, the date on which the Supreme Court delivered its final judgment.
The Rajasthan Electricity Regulatory Commission <a href="https://www.mercomindia.com/rajasthan-regulator-adopts-tariff-for-rvunls-1-gw-2-gwh-bess-projects" target="_blank" rel="noopener">approved</a> the tariff discovered through competitive bidding for setting up 1,000 MW/2,000 MWh of standalone battery energy storage systems. The approved tariffs range between ₹177,500 (~$1,968)/MW/month and ₹178,500 (~$1,979)/MW/month. The Commission directed Rajasthan Rajya Vidyut Utpadan Nigam to publicly disclose the names of the successful bidders and their respective tariffs on its website for 30 days after execution of the battery energy storage purchase agreements.
The Uttar Pradesh Electricity Regulatory Commission <a href="https://www.mercomindia.com/uttar-pradesh-commission-approves-procurement-of-1-2-gw-of-renewable-power" target="_blank" rel="noopener">approved</a> the procurement of 1.2 GW of firm and dispatchable renewable power by Uttar Pradesh Power Corporation through a long-term power sale agreement with SJVN. The approval covers power sourced from interstate transmission system-connected renewable energy projects integrated with energy storage systems and discovered through a tariff-based competitive bidding system.
Renewable energy generation in Rajasthan <a href="https://www.mercomindia.com/rajasthan-renewable-curtailment-continues-as-grid-constraints-limit-evacuation" target="_blank" rel="noopener">continues</a> to experience large-scale curtailment, despite new transmission projects coming online. The recently commissioned 765 kV Khetri–Narela interstate transmission line was expected to ease evacuation constraints for renewable projects in western Rajasthan. On the ground, however, developers say little has changed during peak solar hours. The concern was raised at a Central Electricity Authority meeting convened to address renewable energy curtailment in the state.
The Himachal Pradesh government <a href="https://www.mercomindia.com/himachal-pradesh-to-install-rooftop-solar-systems-at-health-institutions" target="_blank" rel="noopener">decided</a> to install rooftop solar systems on buildings at all state health institutions as part of a broader renewable energy push. The rooftop solar systems will be installed in phases to promote green energy and reduce electricity costs. As a part of its renewable energy initiative, the government has set a target to install solar energy projects with a total capacity of 500 MW within the next two years.
NLC India <a href="https://www.mercomindia.com/nlc-india-approves-plan-to-list-renewable-energy-subsidiary-nirl" target="_blank" rel="noopener">approved</a> the listing of its wholly-owned subsidiary, NLC India Renewables (NIRL), on the stock exchanges through the sale of up to 25% of its equity. The NLC board’s in-principle approval of the listing proposal will be communicated to the Ministry of Coal for onward submission to the Department of Investment and Public Asset Management. The board of NLC India also approved investing ₹666 million (~$7.38 million) in NIRL by subscribing to its equity shares.
Government-owned lender Indian Renewable Energy Development Agency (IREDA) <a href="https://www.mercomindia.com/higher-loan-disbursements-take-iredas-revenue-up-25-in-q3-fy-2026" target="_blank" rel="noopener">reported</a> revenue from operations of ₹21.3 billion (~$236.2 million) in the third quarter of the financial year 2026, a 25% year-over-year (YoY) rise from ₹16.98 billion (~$188.3 million). IREDA attributed the jump in revenue to 32% higher loan disbursements which rose to ₹98.6 billion (~$1.09 billion) from ₹74.49 billion (~$826.0 million) a year ago. IREDA’s profit after tax stood at ₹5.85 billion (~$64.9 million), a 38% YoY jump from ₹4.25 billion (~$47.1 million).
Researchers at the University of Newcastle <a href="https://www.mercomindia.com/researchers-develop-method-to-recover-97-silver-from-used-solar-panels" target="_blank" rel="noopener">developed</a> a safe and effective method to recover high-grade silver from end-of-life solar panels without using acid, offering a potential breakthrough for the solar recycling and resource recovery industries. The new process helps recover more than 97% of the silver from an end-of-life photovoltaic panel within just a few minutes, marking a significant improvement over conventional recovery methods that take several hours and rely heavily on chemical-intensive processes that pose environmental and safety challenges at scale.
Around a fifth of the solar panels <a href="https://www.mercomindia.com/researchers-find-20-of-solar-panels-degrade-faster-than-expected" target="_blank" rel="noopener">examined</a> in a news study by the University of New South Wales were found to fail much faster than expected, with some likely to last for only half of their lifetime. Researchers identified the reason behind the so-called ‘long tail’ in the probability distribution of the performance data after analyzing information obtained from nearly 11,000 different photovoltaic samples globally.

Daily News Wrap-Up: Has Aggressive Bidding Hit Standalone BESS Viability?

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					</table>Only 50% of the standalone battery energy storage system (BESS) projects evaluated in a new industry survey showed positive project economics and economic viability under modeled assumptions, highlighting the continuing cost challenges facing the industry sector, according to the ‘Levelized Cost of Storage (LCOS) and Bidding Trends in Indian Energy Storage Projects&#8217; report released by <a href="https://www.mercomindia.com/research" target="_blank" rel="noopener">Mercom India Research</a>.
The report assessed projects auctioned between July and November 2025.
The report examined the actual cost of energy storage, the market&#8217;s current state, and bidding trends in relation to the underlying project economics. It evaluates both standalone battery storage projects and solar-with-storage projects using LCOS-based analysis.
“Aggressive bidding, often by developers with limited experience in developing energy storage projects, raises serious questions about the realism of underlying cost assumptions. When auction tariffs are not aligned with the actual levelized cost of storage projects, the gap between bid prices and actual project costs widens, increasing the risk of delays, stalled projects, and weakening investor confidence in the auction framework,” said Raj Prabhu, chief executive officer of Mercom Capital Group.
“There is growing concern across the industry that some of the lowest bids winning energy storage auctions are not economically sustainable,” Prabhu added.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/LCOS-Energy-Storage-Report.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-89012 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/LCOS-Energy-Storage-Report.png" alt="Is Aggressive Bidding Distorting the Economics of Energy Storage Projects in India?" width="641" height="394" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/LCOS-Energy-Storage-Report.png 641w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/LCOS-Energy-Storage-Report-300x184.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/LCOS-Energy-Storage-Report-624x384.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/01/LCOS-Energy-Storage-Report-600x369.png 600w" sizes="auto, (max-width: 641px) 100vw, 641px" /></a>
The report states that cell costs, project scale, storage duration, cycling profile, and contract tenure are driving factors of storage-delivered energy costs.
Energy storage has moved from the periphery and has become an integral component of India’s clean energy initiative, but with aggressive bidding, there are still serious questions about the economic viability of these projects.
The report states that longer-duration energy storage delivers the lowest LCOS in Indian tenders.
Between July and November 2025, 24 GWh of storage tenders were issued, while 25.6 GWh were auctioned. They included standalone battery energy storage systems and solar-plus-storage systems.
This gradual uptick in tendering activity has led to greater price convergence, with tariffs settling in the range of ₹150,000 (~$1,707)/MW/month to ₹185,000 (~$2,106)/MW/month under the Viability Gap Funding (VGF)-linked program.
As of June 2025, cumulative installed battery storage capacity <a href="https://www.mercomindia.com/product/india-energy-storage-landscape-1h-2025" target="_blank" rel="noopener">stood</a> at 490 MWh, with solar-plus-storage projects accounting for the majority of deployments. The pipeline continues to expand rapidly, with nearly 74.8 GW of storage-linked capacity under various stages of tendering by mid-2025.
Mercom India’s <a href="https://www.mercomindia.com/product/indian-energy-storage-projects" target="_blank" rel="noopener">‘LCOS and Bidding Trends in Indian Energy Storage Projects Report’</a> analyzes cost trends, project design assumptions, economic viability, and LCOS dynamics across energy storage projects auctioned in July and November 2025. The report also focuses on bid viability, highlighting the wide disparity between aggressively priced auction tariffs and project cost fundamentals.
By comparing auction outcomes with the LCOS-based economic benchmarks, the report highlights growing cost pressure on the energy storage market. For more information, visit: <a href="https://mercomindia.com/research/" target="_blank" rel="noopener">https://mercomindia.com/research/</a>
Mercom&#8217;s ‘LCOS and Bidding Trends in Indian Energy Storage Projects Report’ is 47 pages long and provides detailed LCOS analysis for battery energy storage projects auctioned between July and November 2025.
For the complete report, Visit:  <a href="https://www.mercomindia.com/product/indian-energy-storage-projects" target="_blank" rel="noopener">https://www.mercomindia.com/product/indian-energy-storage-projects</a>

Is Aggressive Bidding Distorting the Economics of Energy Storage Projects in India?

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					</table>The capital cost for long-duration (4 hours or more) utility-scale battery energy storage systems (BESS) in markets outside China and the U.S. reached roughly $125/kWh by October 2025, according to a recent report by <a href="https://ember-energy.org/" target="_blank" rel="noopener">Ember</a>.
This cost reflects a split of around $75 for core equipment and about $50 for installation, engineering, and grid connection.
Such reductions translate into a levelized cost of storage (LCOS) of $65/MWh for large, contracted projects. This figure represents the cost of moving one megawatt-hour of electricity from one time to another. However, this LCOS excludes the cost of charging electricity, thereby isolating the true cost of storage infrastructure.
Why Prices Are Falling So Quickly
Core equipment prices fell by about 40% in 2024 compared with 2023. Provisional data and tender results suggest another significant drop in 2025.
BloombergNEF’s 2024 global benchmark for core BESS equipment was around $165/kWh, but this figure averages higher-cost markets such as the U.S. and a wider supplier base. The $75/kWh cited for 2025 reflects large-scale procurement of Chinese equipment in lower-tariff markets late in the year. The implied 55% fall between the two, therefore, is not representative of global conditions.
The global manufacturing landscape has also expanded rapidly, and 2024 saw a large oversupply, roughly three times annual demand. This market imbalance has forced suppliers to compete aggressively. Non-equipment costs such as civil works and grid connection have also edged down, but their contribution to the overall reduction in project capex is much smaller than the impact of falling battery and enclosure prices.
Longer lifetimes, higher round-trip efficiency, and improved degradation rates have reduced the per-unit cost of stored energy. Modern utility storage systems routinely achieve about 90% efficiency and can operate for 20 years at one cycle per day. Many now deliver between 10,000 and 12,000 cycles over their lifetimes. Earlier generations typically operated at around 80–85% efficiency and were designed for a lifespan of closer to 10 years, so these improvements alone have shaved tens of dollars per MWh off LCOS.
Manufacturers and developers have streamlined project assembly through modular plug-and-play designs. As a result, installation risk is lower, and soft costs are more predictable. Over the past decade, total installed costs fell by around 20% per year, while annual deployment grew by roughly 80%.
Improved safety performance, especially lower fire risk and the shift from purely merchant projects to contracted auction-based revenues, has further reduced perceived project risk and helped cut financing costs.
What Falling Costs Mean for Solar Power
One of the clearest implications of low-cost storage is its impact on solar electricity. The report estimates that storing half of a solar project’s daily output at an LCOS of $65/MWh would add roughly $33 to the cost of each MWh of solar energy. When added to the 2024 global average solar power cost of about $43/MWh, the resulting dispatchable solar cost is around $76/MWh, according to the report.
In practical terms, storing about 50% of daytime generation allows solar output to be shifted into evening and night-time hours, aligning production much more closely with typical demand profiles without needing to cover every hour of the year.
In regions with ultra-low-cost desert solar, oversizing PV capacity and storing a larger share of output can be even more attractive, pushing the effective cost of dispatchable solar well below competing fossil options.
This figure represents electricity available on demand, not just during daylight hours. The report emphasises that dispatchable solar is not the same as baseload solar. A true baseload supply would require additional overbuild and larger storage volumes. Still, the finding is powerful. Dispatchable solar in this price range increasingly competes with new gas generation, particularly in countries reliant on expensive LNG imports.
As a result, solar plus storage is poised to meet a substantial portion of incremental global electricity demand, transforming solar from a “cheap daytime” resource into an affordable, anytime source of power.
Battery-backed solar energy systems <a href="https://www.mercomindia.com/24-hour-uninterrupted-solar-power-with-battery-storage-is-real-ember/" target="_blank" rel="noopener">need</a> just 17 kWh of storage to flatten a 5 kW solar generation profile into a steady 1 kWh of output over 24 hours, according to Ember.
Auctions and Contract Structures Shape Costs
Ember highlights how project financing conditions influence LCOS just as much as hardware pricing. Competitive auctions with fixed-revenue contracts allow developers to secure low-cost debt and equity. Discount rates fall to 5-7%, which is essential to reaching the $65/MWh LCOS benchmark.
Analysis shows that even if the discount rate is raised to around 11% and utilisation rises to roughly one full cycle per day (96% utilization) with slightly higher efficiency, the LCOS for a $125/kWh project still sits near $65/MWh, underlining how robust the economics are at today’s capex levels.
Markets relying on merchant revenues face higher uncertainty and are often financed at discount rates of 10 to 15%. This raises LCOS significantly. Some countries are also using capital expenditure subsidies to reduce bid prices. India, for example, provided a subsidy of just over $20/kWh, which helped push auction bids into record-low territory.
Regional Variations
Markets with strict testing requirements or high import duties often see core equipment costs closer to $100/kWh. Others with more flexible standards and lower duties benefit from the global benchmark price of around $75/kWh. In some markets, such as India, local manufacturing of power conversion and energy management systems has become competitive with Chinese suppliers, which partly offsets higher costs stemming from tariffs or localisation rules.
Connection costs can range from about $30/kWh to nearly $100/kWh, depending on location and network operator rules. Co-located solar and storage projects often avoid some of these charges, improving their economics. The indicative $50/kWh allowance for EPC and grid connection generally assumes that land is either provided by a utility under the tender or acquired at low cost.
In sites with expensive land or complex connection requirements, these costs can be substantially higher. Where batteries are installed behind the meter or directly at existing solar plants, grid connection fees can become almost negligible, further enhancing project returns.
Examples from recent auctions in Saudi Arabia, India, and Italy all point to capital costs in the range of $120/kWh.
Around 80% of projected global electricity demand growth over the next decade will occur in regions with excellent solar resources, which aligns closely with the economics of solar plus storage. For many of these countries, combining cheap daytime solar with low-cost storage now represents a more affordable and faster path to meeting demand than building new gas-fired capacity, especially where liquefied natural gas imports are expensive.
The Shift Beyond Lithium
Lithium-iron phosphate technology remains dominant for grid-scale storage. Most systems integrate 5 to 6/MWh enclosures equipped with power conversion and energy management systems. These enclosures account for roughly 90% of the core equipment cost. In typical utility-scale projects, 5–6 MWh of cells are packed into a standard 20-foot containerised enclosure, which simplifies logistics, factory assembly, and site installation.
Round-trip efficiency is typically around 90%, and annual degradation stays below 2%. After 20 years of operation, systems retain around two-thirds of their original capacity. Four-hour storage durations are becoming the standard for utility projects because many components scale with power rather than energy, making longer durations increasingly cost-effective.
For four-hour systems in particular, several major components are sized to the project’s power rating rather than energy, making them around 10–15% cheaper per kWh than shorter-duration projects; beyond four hours, the incremental savings from longer durations become progressively smaller.
There are also early signs of a transition toward sodium-ion batteries. These remove the need for lithium, nickel, and cobalt and could provide greater long-term supply chain flexibility. Today’s dominance of LFP chemistry already eliminates nickel and cobalt from most grid-scale systems; a broader shift toward sodium-ion would also remove lithium, effectively taking all commonly defined critical minerals out of the battery bill of materials.
At the same time, oversizing of installed capacity relative to usable capacity is becoming standard practice, enabling suppliers to offer 20- to 25-year performance guarantees with cycle counts of 10,000–12,000 or more.
Sodium-ion batteries are <a href="https://www.mercomindia.com/sodium-ion-to-set-to-surge-but-still-a-sidekick-to-lithium-by-2030-irena/" target="_blank" rel="noopener">increasingly</a> seen as an alternative because they are built similarly to lithium-ion cells, using sodium instead of lithium. The shared architecture allows manufacturers to adapt existing production knowledge and facilities.
System-Level Risks
Tariffs and local content requirements can inflate equipment costs. Grid connection fees can also swing overall project costs by tens of dollars per kWh. Merchant revenue exposure also increases financing costs and, in turn, LCOS. Project-specific utilisation patterns and degradation rates also mean that some systems deliver better economics than others.
Moreover, the LCOS figures discussed for energy shifting do not account for additional value streams such as frequency control, voltage support, or black-start services; when these ancillary revenues are stacked on top of energy arbitrage, the effective cost of moving a megawatt-hour of electricity can fall well below the headline $65/MWh.
Even so, navigating permitting constraints, network upgrade requirements, and evolving market rules remains critical to ensuring that the falling cost of hardware translates into real-world project delivery at scale.

Long-Duration Utility-Scale BESS Project Cost Drops to $125/kWh: Ember

The Government of India (GoI) has set a target of achieving 175 GW of renewable power installed capacity by December 2022. However, the capacity value of these variable renewable energy resources is limited without grid-scale energy storage.
According to a report published by the Lawrence Berkeley National Laboratory (<a href="https://www.lbl.gov/" target="_blank" rel="noopener noreferrer">LBNL</a>), a large number of energy storage projects are being built worldwide, and there is a significant interest among policymakers in India as well.
The report states that the sharp decline in the prices of lithium-ion (Li-ion) batteries is going to transform how electricity from renewable sources is integrated into the grid.
The report says that India is on the cusp of making important investment decisions over the next two decades. According to the 19th Electric Power Survey, the Central Electricity Authority (CEA) estimates that the peak electricity demand in India will grow at the rate of 6.32% per year and will touch 300 GW by 2026-27 as compared to 162 GW in 2016-17.
According to India’s National Electricity Plan, 123 GW of additional capacity will be required to meet the peak demand, because the contributions of renewable sources in meeting the peak demand are assumed to be minimal. The main reason behind this is that India’s peak demand occurs during the evening, and even though wind energy is available during the evening, it is highly seasonal.
According to CEA, meeting India’s 340 GW peak load and 2,400 TWh energy requirements would require the addition of nearly 50 GW of coal between 2022 and 2027, in addition to 48 GW to be added by 2022.
The report notes that the last 130 GW of coal that provides power during non-solar hours, including morning and evening peak, would run at an effective plant load factor (PLF) of only 24%. Running coal projects at such a low capacity factor would be operationally difficult and would result in total costs per unit of ₹6–8 (~$0.08-0.1)/kWh.
The report further adds that keeping this in mind, an alternative battery energy storage system (BESS) based on low-cost lithium-ion batteries may enable India to meet the morning and evening peak demands. The Ministry of New and Renewable Energy has been tasked with the implementation of the National Energy Storage Mission.
In August last year, SECI had <a href="https://mercomindia.com/seci-tenders-solar-wind-storage/" target="_blank" rel="noopener noreferrer">floated</a> a tender of for 1,200 MW solar-wind hybrid power with guaranteed supply during peak hours. Greenko <a href="https://mercomindia.com/greenko-renew-win-seci-solar-wind-auction-with-storage/" target="_blank" rel="noopener noreferrer">won</a> the auction for 900 MW, and ReNew was awarded 300 MW. Greenko won the bid at a peak power tariff rate of ₹6.12 (~$0.08)/kWh and ReNew Power won at ₹6.85 (~$0.09)/kWh. Many expect this tender to kickstart the commercial deployment of grid-scale storage in India.
According to NITI Aayog and Rocky Mountain Institute estimates, India will account for 800 GW of battery demand per year by 2030. In another report, the Energy Transitions Commission (ETC) projects that the levelized cost of storage systems in India will reduce from $0.41 (~₹30.8)/kWh in 2018 to $0.17 (~₹12.8)/kWh in 2030.
The report adopts a two-pronged approach to estimate the cost of Li-ion based MW scale battery storage systems in India. The report takes the case of solar projects in Nevada, which are coming online in 2021, with 12-13% solar energy used to charge the battery, and PPA prices in the range of $0.032-$0.037/kWh. These rates are nearly 9-27% higher than the current tariffs in India, which is around ₹2.75/kWh.
The report further notes that capital costs for batteries co-located with storage projects in India would fall to $187 (~₹14,074))/kWh in 2020 and $92 (~₹6,924))/kWh in 2030. The levelized cost of storage (LCOS) of standalone BESS is estimated to be ₹7.12/kWh (~$0.095/kWh) by 2020, ₹5.06/kWh (~$0.07/kWh) by 2025, and ₹4.12/kWh (~$0.06/kWh) by 2030.
<a href="https://mercomindia.com/wp-content/uploads/2020/06/Levelized-Cost-of-Storage-Estimates-for-1-MW-BESS-in-India.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-19525" src="https://mercomindia.com/wp-content/uploads/2020/06/Levelized-Cost-of-Storage-Estimates-for-1-MW-BESS-in-India.png" alt="Levelized Cost of Storage Estimates for 1 MW BESS in India" width="541" height="325" srcset="https://cms.mercomindia.com/wp-content/uploads/2020/06/Levelized-Cost-of-Storage-Estimates-for-1-MW-BESS-in-India.png 541w, https://cms.mercomindia.com/wp-content/uploads/2020/06/Levelized-Cost-of-Storage-Estimates-for-1-MW-BESS-in-India-300x180.png 300w" sizes="auto, (max-width: 541px) 100vw, 541px" /></a>
The report further states that the additional per-unit cost for a solar project with a storage system in India will be ₹1.44/kWh ($0.02/kWh) in 2020, ₹1.02 ($0.014)/kWh in 2025, and ₹0.83 ($0.01)/kWh in 2030. This implies that bids for solar with battery storage will hover around ₹3.94 ($0.052)/kWh by 2020, ₹3.32 ($0.044)/kWh by 2025, and ₹2.83 ($0.038)/kWh by 2030.
The report says that these costs are inflation-proof, while coal prices will keep on increasing each year. In the future, the cost difference between solar-plus-storage assets and thermal assets is likely to increase. Hence, new investments in thermal power projects with lifetimes of 25–30 years may present an extreme financial risk.
But for all these projections to hold good, a concerted effort is required on the part of the government to scale up the deployment of solar with battery storage capabilities. A clear-cut policy roadmap is the need of the hour that will give the necessary boost to the battery manufacturing segment and will add new jobs.
According to Mercom, the global battery storage sector <a href="https://mercomindia.com/global-battery-storage-vc-funding-q1-2020/" target="_blank" rel="noopener noreferrer">attracted</a> corporate funding (including VC, debt, and public market financing) worth $244 million in nine deals in Q1 2020 compared to $130 million raised from nine deals in Q1 2019, an 88% increase.
The government also <a href="https://mercomindia.com/government-blueprint-ev-battery/" target="_blank" rel="noopener noreferrer">issued</a> a proposal to set up a national mission on transformative mobility and battery storage initiatives last year. The Cabinet has also approved the creation of the Phased Manufacturing Program (PMP) to support the development of large-scale, export-competitive integrated batteries and cell-manufacturing giga-scale projects in India. The Phased Manufacturing Program will be valid for five years until 2024 and help in localization of production across the entire electric vehicle value chain. The program is expected to be finalized by the national mission on transformative mobility and battery storage.
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