Full Breakdown
Concerns Over India's Record-Low Battery Storage Bids
12/9/2025, 11:50:50 AM
Economic Viability and Safety Risks
India's ambitious plans to enhance its renewable energy capacity are facing significant challenges due to record-low bids for battery energy storage systems. Since 2021, the country has tendered 83 gigawatt-hours (GWh) of battery storage capacity, but only 36 GWh have been awarded, with recent bids in Rajasthan falling below 1.5 rupees (approximately 2 U.S. cents) per kilowatt-hour. Industry experts warn that such low tariffs could render projects economically unviable and deter experienced players from participating in the market. The India Energy Storage Alliance (IESA) has indicated that India needs to ramp up its battery storage capacity to meet a projected requirement of 236 GWh by 2032, yet only 500 megawatt-hours (MWh) of battery systems are currently operational.
Implications of Low Tariffs
The push for lower tariffs is leading to the adoption of cheaper, lower-quality lithium-ion batteries, which raise safety and performance concerns, particularly in high-temperature regions. Debmalya Sen, president of IESA, has expressed that the current bidding environment is detrimental, stating, "This race to provide lowest tariffs is killing the game." Analysts have flagged potential safety risks associated with these batteries, referencing incidents of fires in countries such as China, Japan, South Korea, and the United States. The trend towards utilizing "super cheap cells" could compromise the longevity and safety of battery storage projects.
Financial Maneuvering in the Sector
Some companies that have secured storage tenders are reportedly opting to sell their projects for a premium rather than proceed with construction. This shift has transformed the sector into a financial play, raising concerns about the potential for non-performing assets among banks. Vivek Bharadwaj, CEO of pathtogreenhomes.com, noted that the current bidding environment has led to a situation where established players are withdrawing from projects due to the unsustainable pricing.
Calls for Regulatory Revisions
In response to these challenges, the IESA is lobbying the Indian government to revise tender guidelines. They are advocating for the inclusion of technical eligibility criteria, stricter performance benchmarks, and a phased approach to domestic manufacturing incentives. Power Secretary Pankaj Agarwal acknowledged the government's ongoing review of support policies around storage but did not provide specific details on potential changes.
Conclusion
India's pursuit of battery energy storage to support its renewable energy goals is at a critical juncture. The record-low bids have raised serious concerns about the economic viability and safety of projects, prompting calls for regulatory reforms to ensure a sustainable and secure energy future. As the country aims to double its renewable energy capacity to 500 gigawatts by 2030, the path forward will require careful navigation of these emerging challenges.
Verbatim Quotes
- “This race to provide lowest tariffs is killing the game,” — Debmalya Sen, President, India Energy Storage Alliance
- “A healthy value is typically between 2 rupees and 2.2 rupees per unit for fixed costs, and with charging costs, delivered power should be around 4.5 rupees per unit,” — Vivek Bharadwaj, CEO, pathtogreenhomes.com
- “This entire game has now become a finance play,” — Vivek Bharadwaj, CEO, pathtogreenhomes.com
