India's ambitious clean energy transition, increasingly reliant on large-scale energy storage, faces a significant hurdle: the viability of standalone battery storage projects. A new report by JMK Research and Analytics and the Institute for Energy Economics and Financial Analysis (IEEFA) highlights that tariffs discovered in 2025 for these projects have fallen so sharply they now pose a substantial risk to their execution.
The lowest tariff for 2-hour battery energy storage systems (BESS) reached an unprecedented Rs 1.48 lakh/megawatt/month. This figure stands in stark contrast to the indicative benchmark tariff of Rs 2.3 lakh/MW/month for 2025, revealing a considerable gap between discovered tariffs and actual project costs. Consequently, nearly 75% of the allocated 2-hour capacity is now considered 'at-risk', threatening the financial feasibility of these crucial infrastructure projects.
Surge in Standalone Storage Capacity
India has seen a remarkable increase in tendered energy storage capacity, soaring from 6.8 GW in 2018 to 90.7 GW in 2025. Standalone energy storage system (ESS) tenders, which contract storage capacity independently of specific renewable generation assets, have emerged as the dominant segment. In 2025, ESS accounted for over 71% of the total tendered capacity, with standalone BESS projects constituting 60% of this.
Vasu Mor, Research Associate at JMK Research and Analytics and co-author of the report, noted, "The surge in standalone storage tenders has coincided with declining battery prices and supportive policy measures such as the introduction and expansion of viability gap funding for standalone BESS projects." Among the 10.4 GW of standalone BESS capacity allocated in 2025, the 2-hour, 2-cycle configuration was predominant, designed to address both morning and evening peak demand windows.
Execution Challenges and Future Outlook
The report also delves into the factors influencing the execution of allocated BESS capacity, including battery cost trends, developer capabilities, and financing conditions. Execution risks in standalone BESS are expected to have broader implications for the sector, with potential implementation delays of up to 18 months due to challenges in financial closure, procurement, and commissioning. Lower tariffs could also lead to compromised asset quality, further exacerbating risks.
Despite these near-term challenges, the long-term growth of ESS is deemed inevitable. Prabhakar Sharma, Senior Consultant at JMK Research and Analytics, and a co-author, commented, "Although the near-term challenges may lead to some project cancellations or delays, the eventual growth of ESS is inevitable. This momentum is already visible, with the majority of the around 1.8 gigawatt-hour (GWh) of grid-scale BESS capacity installed as of March 2026 having come online in the last six months of FY2026." He anticipates that the aggressive bidding observed in 2025 will gradually normalize as market participants adjust to the realities of project execution.
Another significant challenge highlighted is the overwhelming reliance on lithium-ion (Li-ion) technology, which exposes the Indian energy storage sector to global supply chain shocks. Tendering agencies are likely to increasingly focus on alternative battery technologies that offer longer lifespans, higher salvage value, and reduced exposure to volatile supply chains.