India’s BESS costs fall, boosting grid-scale storage

Government schemes will support 13,220 MWh of battery energy storage capacity.

India’s Battery Energy Storage System (BESS) costs have dropped significantly in recent competitive bidding, with rates falling from INR10.18/kilowatt-hour (kWh) in 2022 to 2023 to around INR2.1/kWh used for two cycles daily, boosting the affordability of grid-scale storage.

Based on market trends, BESS will be utilised for 1.5 cycles per day, corresponding to storage cost of INR2.8 / kWh, a press release from the Ministry of Power said. However, the average rate of electricity from solar projects is within the range of INR2.5 / kWh, based on the recent tenders.

To maintain the affordability, the ministry will implement a Viability Gap Funding (VGF) Scheme, where 13,220 megawatt-hour of BESS capacity is set up with a budgetary support of INR3,760 crore.

They have also launched a VGF scheme for development of 30 gigawatt-hours (GWh) of BESS capacity, with a financial support of INR 5,400 crore through Power System Development Fund prior to this.

Inter-State Transmission System charges are waived for 12 years for co-located BESS projects commissioned by June 2028. For non-co-located projects, the waiver applies only to projects commissioned before June 2025, and for later projects, the exemption decreases annually in 25% increments.