India continues to deepen its commitment to large-scale energy storage, with the awarding of 10.4 GW of independent BESS system capacity during 2025. However, the sector's strong growth is accompanied by increasing concerns about the economic sustainability of the tariffs achieved in the tenders.
A report by JMK Research and Analytics and the Institute for Energy Economics and Financial Analysis reveals that tenders for stand-alone storage systems already account for more than 71% of all ESS capacity tendered in the country this year, solidifying batteries as a central component to support renewable expansion.
Within that volume, BESS projects account for approximately 60% of the awarded capacity, driven by falling technology costs and government support programs aimed at closing the financial viability gap. The market, which initially prioritized 2-hour configurations to meet morning and evening peak demand, began migrating toward 4-hour solutions, considered more efficient to support the increasing penetration of variable renewable energy sources.
However, the report warns that approximately 75% of the BESS capacity awarded under 2-hour schemes is currently “at risk” due to overly aggressive tariffs. The minimum discovered value fell to 1.48 lakh INR/MW/month, well below the estimated benchmark threshold of 2.3 lakh INR/MW/month, putting pressure on project profitability.
The situation is causing concern among EPC companies and developers, who face greater challenges in securing financing and maintaining supply chains in a tight-margin environment. According to the analysis, this scenario could lead to implementation delays of up to 18 months, contract renegotiations, or even project cancellations if economic conditions do not improve.
Faced with this situation, the sector is beginning to demand regulatory adjustments and revisions to contracting schemes. Among the proposals are minimum rates linked to actual costs, stricter financial eligibility criteria, and mechanisms to reduce the risk of excessively low bids in future auctions.
Despite short-term stresses, the outlook for the Indian storage market remains strong. Grid-connected BESS installations reached approximately 1.8 GWh by March 2026, with much of that capacity coming online during the last fiscal half of the year. The advancement of storage is seen as a key element in maintaining the stability of the electricity system as India increases the share of solar and wind power generation in its energy mix.
The evolution of the upcoming tenders will be crucial in determining whether the country can balance price competitiveness and financial viability in one of the energy storage markets with the highest projected growth globally.