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					</table>Aggressive bidding is rapidly becoming the defining feature of India’s energy storage tender landscape, raising concerns among stakeholders.
As competition intensifies and tender volumes rise, discovered tariffs for battery energy storage systems (BESS) have converged sharply, raising a critical question for the sector: are today’s prices truly reflective of bankable projects, or are they setting the stage for long-term instability?
Between July and November 2025 alone, around 24 GWh of energy storage tenders were issued, while 25.6 GWh were auctioned, spanning both standalone BESS projects and solar-plus-storage configurations.
This steady uptick in tendering activity has coincided with increasing price pressure, particularly under the Viability Gap Funding (VGF)-linked framework, where tariffs have largely settled in the range of ₹150,000 (~$1,635)–₹185,000 (~$2,017)/MW per month.
While these numbers point to rapid market maturation, industry insiders emphasize the growing concerns around economic viability and execution risk.
Factors Driving Increasingly Aggressive Bids
Several structural shifts have reshaped India’s storage tender ecosystem, pushing bidders toward tighter pricing. The introduction of VGF for standalone BESS has significantly lowered the perceived entry barrier, attracting a wider pool of developers, engineering, procurement, and construction (EPC) companies, and new market entrants.
Kishor Nair, Chief Executive Officer at <a href="https://avaada.com/" target="_blank" rel="noopener">Avaada Energy</a>, said, “The jump to ~25 GWh auctioned in a short window has fundamentally changed bidder psychology. Once volumes move from pilot scale to systemically meaningful size, developers begin bidding not just for a project, but for portfolio positioning. Standardised VGF-linked tender documents, fixed availability structures, and assured offtake have induced downside, encouraging more aggressive bidding.”
According to him, the initial days of falling lithium-ion battery prices and improving lifecycle assumptions have created a myth in the industry that costs will take care of themselves. However, India still lacks large-scale, multi-year operating data under grid conditions (high temperatures, cycling profiles, auxiliary losses). “The rising trend of battery prices is a major risk for the Indian market, which is solely dependent on the import of key components for BESS.”
The surge in tender frequency has further intensified competition. With developers eager to secure early scale and long-term pipelines, many bids are driven as much by strategic positioning as by near-term returns.
Economic Viability
On paper, today’s winning tariffs can work, but only under very specific conditions. Projects remain viable if battery procurement prices are locked at assumed levels, financing is secured at competitive rates, augmentation requirements are accurately provisioned for, and commissioning timelines are met without delay.
Nair said that for new entrants, multiple strategic market objectives include securing a first-mover reference project, building execution credentials ahead of larger future tenders, accessing the capital market to raise equity through an IPO, gaining preferred-vendor status with policymakers and lenders, and scouting for land, connectivity, or long-term grid access.
The challenge is that margins at these tariff levels are extremely thin. Even modest deviations, such as higher interest during construction, unexpected supply-chain delays, or penalties for shortfalls, can quickly undermine project economics.
A top executive from a leading power generator said, “Concerns were raised over how developers can maintain viable Internal Rate of Return (IRR) and sound project models under such compressed pricing. India’s BESS expansion should prioritize reliability and long-term value rather than a price war.”
“Similar to Rajasthan’s Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan (PM-KUSUM) project cancellations, the unrealistic bidding could risk similar setbacks if not grounded in realistic cost structures. Some of the current bids appear financially stretched, though future declines in global battery prices could improve feasibility. The overall sentiment remains one of cautious optimism, with the market waiting to see how these bids perform in execution,” he added.
Echoes of Early Solar, Wind Auction Cycles
The current storage bidding trend closely mirrors earlier phases of India’s solar and wind auctions. Aggressive price discovery initially accelerated deployment and established global benchmarks, but was followed by project delays, renegotiations, and a gradual elimination of weaker players.
The key difference is that energy storage is inherently more complex than standalone renewable generation assets. Battery degradation, thermal management, safety compliance, and real-time performance obligations introduce layers of operational risk that are difficult to capture in early-stage financial models designed to analyze the projects.
As a result, the gap between bid assumptions and ground realities can be significantly wider than in vanilla renewable projects.
Pointing to key similarities between BESS projects and the initial boom of solar and wind projects, Nair emphasized that these include race-to-the-bottom pricing driven by balance-sheet strength rather than asset-level returns, overconfidence in execution timelines rather than supply chain constraints, and the entry of players without deep EPC or O&amp;M experience, relying heavily on subcontracting and original equipment manufacturer information.
It’s not just standalone BESS projects that are witnessing aggressive bidding and tariff reductions; the same holds true for solar-plus-BESS projects over the last few years.
Solar Plus BESS Tariffs
The tariffs have fallen significantly for solar-plus-BESS projects. Tariffs for standalone as well as solar-plus-BESS projects have fallen significantly over the last few years, with the lowest ever tariff of ₹2.7 (~$0.029)/kWh <a href="https://www.mercomindia.com/acme-and-ceigall-win-rumsls-600-mw-solar-plus-storage-auction" target="_blank" rel="noopener">discovered</a> in Rewa Ultra Mega Solar’s 600 MW solar with BESS auction in September last year.
This gives a broader view of things to come, as solar/wind plus BESS projects will take the lead in the near future. But how far this optimism will sustain is anybody’s guess.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-89903 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2.png" alt="Aggressive Bidding Puts India’s Energy Storage Push at Crossroads" width="703" height="512" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2.png 703w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2-300x218.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2-650x473.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2-624x454.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/02/LCOS2-600x437.png 600w" sizes="auto, (max-width: 703px) 100vw, 703px" /></a>
As of June 2025, the total installed battery storage capacity stood at 490 GWh, with solar plus storage accounting for the bulk of the deployments, according to the ‘Levelized Cost of Storage (LCOS) and Bidding Trends in Indian Energy Storage Projects’ report released by <a href="https://www.mercomindia.com/research" target="_blank" rel="noopener">Mercom India Research</a>.
Will the Market Self-Adjust?
Selective regulatory refinement may be necessary to avoid repeating past boom-and-bust cycles. Stronger pre-qualification criteria, clearer definitions around degradation and augmentation, and stricter enforcement of performance standards could improve bid quality without dampening competition.
Laying down the markers for the BESS market, Nair said that a partial self-correction is likely. A few developers have already begun to face the reality, but some regulatory intervention would definitely help avoid systemic risk.
Market forces will eventually penalize undercapitalized or inexperienced bidders and push lenders to demand higher equity buffers and higher interest rates for such unrealistic projects. This, in turn, would lead to consolidation through asset sales or restructuring. Market watchers say the goal should not be price control, but risk transparency and execution discipline.
The Path Forward
In the future, India’s energy storage tender ecosystem will need to evolve beyond pure price discovery. Incorporating performance-linked evaluation metrics and enabling constant revenue streams can help balance affordability with financial sustainability.
Highlighting the need for a mature ecosystem, Nair noted that the ecosystem would likely feature differentiated tenders and separate products for peak shaving support, renewable firming for RE-RTC, and grid ancillary services.
This allows pricing to better reflect the actual value delivered.
Calling for performance-based revenue structures, he said the ecosystem should move beyond fixed availability to include cycle efficiency, response time, degradation-adjusted output, and stronger domestic supply chains with the support of an ALMM-like framework.
Energy storage is a critical pillar of India’s energy transition and a strategic priority for the Government of India. Unlike early solar and wind projects, energy storage is at an inflection point, with significantly higher technical complexity and lifecycle risks, making execution failures at this stage potentially consequential.

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					</table>The pace of energy transition is contingent on the steady supply of components necessary for project development. Solar is a major component in India&#8217;s goal to install 500 GW of non-fossil fuel-based energy capacity by 2030. However, the government&#8217;s push to deploy locally manufactured modules for solar projects has created bottlenecks and could jeopardize the growth rate in capacity additions.
In the first half (1H) of the calendar year (CY) 2024, solar projects totaling 14.9 GW were <a href="https://www.mercomindia.com/product/q2-2024-india-solar-market-update" target="_blank" rel="noopener">added</a> in India, topping all previous half-yearly and annual installations. Year-on-year, this was a 282% growth compared to PV installations in 1H 2023.
The surge in installations was mainly due to the rush to import modules to commission projects ahead of the reimposition of the Approved List of Models and Manufacturers (ALMM) Order from April 2024. The government has mandated that developers source modules only from companies enlisted under the ALMM, which currently has only domestic manufacturers.
Among the supply-side challenges developers discussed with Mercom, the quality of modules, high prices, and the ability to cater to large orders stand out.
Reasons for developers&#8217; reluctance &#8211; Quality
Several developers noted the lower efficiency of locally made modules and the high degradation rate.
&#8220;While we are focused on reaching our renewable energy goals and adding to solar capacities, what we are overlooking is the quality of modules produced in the country,&#8221; said Surajit Chanda, executive with project development experience.
&#8220;Considering the price point, the modules are not up to the mark,&#8221; he added.
Another leading developer pointed out that low-quality modules degrade faster and are more prone to defects. &#8220;The domestic modules are not as efficient as Chinese modules. Many of these solar modules are failing the I-V tests. When we check the samples, a 550 Wp solar module is shown as giving the rated wattage, but when we use them in the projects, they give less wattage.&#8221;
The I-V tests measure a module&#8217;s current and voltage output under different loads. This ensures that the modules operate optimally and produce the expected power output.
However, manufacturers claim that most modules produced in India are of good quality and meet international standards.
&#8220;Indian module manufacturers always follow internationally recognized standards such as IEC (International Electrotechnical Commission) certifications, which ensure that their products meet high performance, safety, and reliability criteria. Indian companies have invested heavily in advanced technology and processes to ensure their products are competitive globally,&#8221; says Deepak Jain, Chief Technical Officer at Insolation Energy, a module manufacturer.
While Indian manufacturers are producing export-quality modules, the feedback from local developers has been contradictory. Developers highlight that the bill of materials used in modules exported is not the same as in the modules supplied to domestic projects.
Commenting on ensuring the quality of modules, Sishir Garamella, Head of International Business Development at Kiwa PVEL, a solar module reliability and performance testing solutions provider, said, &#8220;The onus is mainly on the buyers. Mature markets have a strong bankability process in place. There is an urgent need for the India downstream community to have a similar process in place.&#8221;
In April 2021, the government approved the Production-Linked Incentive (PLI) program to encourage domestic manufacturing of globally competitive solar PV modules.
&#8220;India&#8217;s goal of installing 500 GW of renewable energy does not seem attainable. While PLI is in place to fuel the manufacturing of good-quality modules, it alone cannot make a difference. There needs to be more interventions and incentives for the manufacturers to make global standard modules,&#8221; Chanda said.
Chanda also suggested possible interventions. &#8220;To improve the quality, the government must build an ecosystem for solar module manufacturers. Most raw materials are sourced from China. The government must create an investor-friendly environment, improve infrastructure, and finance small manufacturers at lower interest rates. This will gradually improve the quality.&#8221;
Yadav called for easing import duties on raw materials, especially glass. &#8220;The duties can be reimposed once the industry emerges from the sunrise stage.&#8221;
Module testing and certification agencies can work with manufacturers to improve and meet the required quality standards.
Tristan Erion-Lorico, VP of Sales and Marketing, Kiwa PVEL, said, &#8220;We provide feedback to the manufacturers on the issues we notice during testing. We often notice issues before they are seen in the field, and feedback is provided with data. For example, UVID is a genuine concern with TOPCon cells. The industry is still evolving in its position to solve this issue. That said, issues like LID and LETID are broadly solved. Further, our colleagues at Kiwa PI Berlin provide third-party factory audits to increase the quality in manufacturing facilities around the globe.&#8221;
&#8220;We have often seen issues in invoking module warranties; hence, it&#8217;s best to require testing beforehand to mitigate quality and reliability issues. The need for extended reliability is more important in a rapidly evolving industry from a technology standpoint.&#8221;
Deepak Jain from Insolation Energy said assisting manufacturers with the costs and processes of obtaining international quality certifications, such as IEC standards, can help ensure their products meet global benchmarks. &#8220;This support might include covering certification fees or providing guidance through the certification process.&#8221;
High prices and supply constraints
Solar project development activity has accelerated, with the Ministry of New and Renewable Energy (<a href="https://mnre.gov.in/">MNRE</a>)  <a href="https://www.mercomindia.com/mnre-renewable-energy-bidding-trajectory" target="_blank" rel="noopener">announcing</a> the annual bidding trajectory of 50 GW until 2028.
&#8220;The quality of the domestic modules needs to improve. Even if the manufacturers are asking for higher prices, we can factor that in the PPA prices, but the efficiency should be up to the mark so that we do not have to compromise on generation,&#8221; a developer commented.
&#8220;In the 1 GW projects installed, we have about 90% of China-made modules. Even considering imports and customs duties, China-made modules are cheaper and better quality. There is also an issue with Indian modules regarding supply. The supply is low compared to the price at which modules are available in the market,&#8221; the developer said.
Virpal Yadav, the COO of <a href="https://sunkind.in/">Sunkind Energy</a>, concurred. &#8220;The price point sometimes does not justify the quality of modules delivered.&#8221;
Developers suggest that MNRE investigate the pricing and quality of the domestic modules.
Besides the quality, developers are also facing a shortage of domestic modules. Even if available, the lack of timely supply and higher costs have pushed some installers catering to smaller government projects to resort to second-hand solar modules, risking long-term performance.
The cumulative capacity of ALMM-enlisted modules <a href="https://www.mercomindia.com/mnre-solar-module-capacity-almm" target="_blank" rel="noopener">stands </a>at 54.7 GW. India&#8217;s cumulative solar module <a href="https://www.mercomindia.com/india-solar-module-manufacturing-2023" target="_blank" rel="noopener">manufacturing</a> capacity reached 64.5 GW in December 2023. Out of the installed module manufacturing capacity, nearly 60% was equipped to make modules in M10 and G12 wafer sizes. Per Mercom India Research, these additions were driven by domestic demand, the ALMM mandate, and potential export <a href="https://www.mercomindia.com/shortage-of-india-made-projects-with-dcr-mandate" target="_blank" rel="noopener">opportunities</a>.

Project Developers Voice Concerns Over Quality of Domestic Solar Modules

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