A recent report by Mercom India Research has highlighted the cost challenges facing the energy storage industry in India. The report, “Levelized Cost of Storage (LCOS) and Bidding Trends in Indian Energy Storage Projects,” found that only 50% of standalone battery energy storage system (BESS) projects evaluated showed positive project economics and economic viability under modeled assumptions. The report assessed projects auctioned between July and November 2025 and examined the actual cost of energy storage, market trends, and bidding patterns.
The report notes that aggressive bidding, often by developers with limited experience, raises concerns about the realism of underlying cost assumptions. This can lead to a gap between bid prices and actual project costs, increasing the risk of delays, stalled projects, and weakening investor confidence. The report’s author, Raj Prabhu, CEO of Mercom Capital Group, stated that there is growing concern across the industry that some of the lowest bids winning energy storage auctions are not economically sustainable.
The report identifies cell costs, project scale, storage duration, cycling profile, and contract tenure as key drivers of storage-delivered energy costs. It also found that longer-duration energy storage delivers the lowest LCOS in Indian tenders. Between July and November 2025, 24 GWh of storage tenders were issued, and 25.6 GWh were auctioned, including standalone battery energy storage systems and solar-plus-storage systems.
The report highlights a gradual uptick in tendering activity, leading to greater price convergence, with tariffs settling in the range of ₹150,000 (~$1,707)/MW/month to ₹185,000 (~$2,106)/MW/month. As of June 2025, cumulative installed battery storage capacity stood 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.
The report provides detailed LCOS analysis for battery energy storage projects auctioned between July and November 2025 and highlights growing cost pressure on the energy storage market. It compares auction outcomes with LCOS-based economic benchmarks, highlighting the wide disparity between aggressively priced auction tariffs and project cost fundamentals. The report is 47 pages long and provides insights into the energy storage market in India, including cost trends, project design assumptions, economic viability, and LCOS dynamics.