By Saurabh Kumar, Vice President – India, Global Energy Alliance for People and Planet
A major milestone in India’s energy transition was marked with the commissioning of the country’s first utility-scale standalone battery energy storage system (BESS) project, developed collaboratively by BSES Rajdhani Power Limited (BRPL), IndiGrid, AmpereHour Energy and Global Energy Alliance for People and Planet (GEAPP).
With India’s plans to integrate 500 GW of renewable energy projects into the grid accelerating, an urgent need to establish an estimated 47-50 GW of storage capacity has emerged. This milestone is thus important, as the current installed capacity stands at just 5.3 GW, largely coming from legacy pumped storage systems, with no significant additions being made in recent years. GEAPP and BRPL have, therefore, set a benchmark for storage deployment by completing this project within a 20-month timeline, thus establishing a model that other utilities can replicate across the country. This was enabled by a combination of regulatory innovation and a transparent procurement process, which contributed to making the project both commercially viable and operationally sound.
The project was originally conceived in 2019 and faced early regulatory roadblocks, as the Delhi electricity regulator rejected the proposal twice. It was GEAPP’s intervention, which involved identifying key gaps and introducing innovative monetisation mechanisms, that led to the project gaining regulatory confidence and thus the approval to move forward.
Consequently, the initiative became India’s first grid-connected battery storage project to secure approval through a two-stage process. This included an in-principle clearance, which was followed by final approval post reverse auction. This is also the country’s first BESS project using the battery-as-a-service model, with BRPL only paying a monthly service charge determined through the competitive bidding process. The project also monetised multiple value streams by integrating additional revenue sources including ancillary services, significantly improving its commercial viability. Beyond deployment, the project’s greatest contribution may be its role as a sectoral template for standardised bidding documents, developerutility contracts and regulatory approval formats. As a result, the groundwork has been laid for other utilities to replicate the model with reduced transaction costs and clearer regulatory pathways.
Scaling battery storage projects
In order to scale efforts, GEAPP has been collaborating with the World Bank and the Government of India to build a shared technical assistance facility. While this may not be a pooled fund, it is a coordinated mechanism that can provide support to over 12 utilities. Under this framework, GEAPP is managing technical support across the participating utilities by helping design the structure and prepare projects for deployment. This coordinated assistance is critical for building a robust pipeline of projects in order to achieve the target of establishing 40-50 GW of storage capacity in the next five years. In terms of financing, discussions are being held to establish a line of credit for capital expenditure support through the State Bank of India. The World Bank and IndiGrid are working closely with the Indian government to finalise a $300 million facility. This will enable developers such as IndiGrid to access funds at a reasonable cost, and help make battery storage-as-a-service affordable for distribution utilities.
Driving down costs
A key highlight of the recently commissioned BESS project is a significant reduction in benchmark costs, by nearly 55 per cent. This achievement has set a precedent in pricing competitiveness. As such, it is pertinent to evaluate the drivers that made such cost-efficiency plausible.
One of the primary factors was the creation of a highly transparent bidding document. The project team conducted three rounds of meetings with bidders, addressing all doubts and ensuring clarity on every clause. This level of transparency fostered trust among participants and eliminated ambiguity, which helped drive down the risk premiums that are usually factored into bid prices.
Second, the project structure included forward-looking incentives. While arbitrage was the only monetisable stream at the time of bidding, the document explicitly outlined that future revenue streams, such as ancillary services or capacity markets, will be shared with the developer. This allowed bidders to lower their upfront return expectations, as they were assured that the long-term revenues could help offset any initial trade-offs.
A third critical decision was to prioritise quality over quantity. Given the importance of getting India’s first grid-scale battery project right, preference was given to bidders with prior battery storage experience. Although none of the bidders had deployed projects of this scale before, all three had existing installations and technical know-how, which ensured competence without compromising cost.
Fourth, the project team ensured that the battery storage service agreement was fair and balanced. Unlike typical utility contracts in India, which tend to be one-sided in favour of the utility, the agreement recognised risk-sharing. A one-sided agreement often prompts developers to pad costs as a hedge against unforeseen liabilities. By creating a more equitable contract, the team helped eliminate unnecessary cost buffers. Consequently, these measures had a clear impact. This was evident when the bids were opened nearly 18 months ago, as the tariff discovered was 35 per cent lower than that seen in other large-scale tenders, such as SECI 1 GW tender or the 500 MW Uttar Pradesh and Kerala projects–all of which had tariffs exceeding Rs 10 per unit. In contrast, this project’s discovered tariff was in the Rs 4.50-Rs 5 range. Even after excluding the concessional loan component, the total cost was still about 45 percent below the prevailing benchmark. For reference, the Government of India’s Viability gap funding scheme in 2023 had fixed a benchmark tariff of Rs 6.50 per unit. The discovered tariff was well below that, primarily due to the project’s multi-service approach. Unlike conventional tenders that only value storage arbitrage, this project recognised the broader functionality of batteries, which enabled the monetisation of several additional grid services.
Addressing challenges by learning from global experiences
Even as the deployment of India’s first grid-connected battery storage project marks a pivotal shift, several policy challenges continue to pose barriers in widespread adoption. One of the most critical gaps is the absence of a capacity market, which is an essential feature in many developed energy systems.
In markets such as the US and UK, grid flexibility is ensured through a capacity market mechanism. Here, the system operator secures a fixed quantum of capacity, which is often used during peak periods such as early morning or evening in order to maintain grid stability. This arrangement allows the system operator to reserve capacity while enabling developers to participate in the energy market for additional revenue. A key benefit of this model is the availability of a fixed payment component, which helps lower project costs and increases commercial viability.
However, India currently lacks such a mechanism. Accelerating battery storage deployment will require intervention from the Central Electricity Regulatory Commission and the Ministry of Power to establish an ancillary services market that includes capacity-based payments. As Spain and Portugal have demonstrated the vulnerabilities of systems that lack adequate flexibility, it is crucial to manage the growing share of intermittent renewable energy to ensure grid stability.
While battery systems have been identified as generating assets, the applicability of GST is still under review.
Despite these challenges, global learnings and collaborations under GEAPP have enriched India’s battery deployment strategy. The Alliance, backed by three founding philanthropic institutions and supported by Alliance partners, has enabled the transfer of best practices into the Indian context.
The concept of monetising multiple battery value streams was inspired by similar efforts in the state of California, USA, and other advanced markets. Additionally, the design framework for ancillary services that GEAPP is proposing to the Government of India is based on real-world models adopted in the US, UK and Europe.
Another important innovation is the development of an open-source battery management system (BMS). GEAPP has used international experience to develop a “Make in India” BMS. Currently deployed in the flagship Delhi project, this system is undergoing testing. Once validated, it will be made freely available for any utility or developer to adopt, with GEAPP offering technical support at no cost.
Such initiatives are designed not only to bridge current regulatory and technical gaps, but also to create a sustainable and replicable battery storage ecosystem in India.
Outlook for India
With the successful deployment of India’s first grid-scale battery storage project, GEAPP is optimistic about the path ahead. The organisation is now focused on scaling its impact across three core areas that are seen as critical to India’s clean energy transition: battery storage, grid digitalisation and decentralised renewables.
The first priority is to rapidly scale up battery energy storage and bring the market to a self-sustaining tipping point. GEAPP envisions a scenario in the next two to three years where the battery storage sector functions without the need for external interventions, like utility-scale solar today.
The second key focus is on the digitalisation of the power grid. A digitised grid allows for greater flexibility by enabling demand response and integrating higher shares of renewable energy. By unlocking the value of real-time data, utilities can better manage variability, reduce losses and plan infrastructure more effectively.
The third and equally important priority is decentralised renewable energy. This segment remains largely untapped in India, but GEAPP sees enormous potential, particularly in light of innovative national schemes such as the Pradhan Mantri Suryodaya Yojana (PM Surya Ghar), which aims to install solar rooftops on 10 million homes.
In conclusion, these three pillars – storage, digitalisation and decentralisation – collectively represent GEAPP’s strategic vision for accelerating India’s energy transition. With continued momentum, India is not only on track to meet its 2030 target of 500 GW of non-fossil fuel capacity, but is well-positioned to exceed it.
