By Kaushik Narayanan, Founder and CEO, Minalav
Commercial and industrial (C&I) customers are emerging as one of the biggest drivers of renewable energy growth in India, ensuring decarbonisation and cutting power costs. Solar-wind hybrids with sufficient oversizing have traditionally been the answer to C&I consumers’ demand for higher levels of renewable energy penetration and round-the-clock (RTC) stable electricity supply.
Batteries are now rewriting this equation, enabling even solar-led set-ups to reach higher levels of capacity utilisation factor (CUF) and penetration. But the economics of integrating batteries into the mix depend on multiple variables, the most important being the arbitrage in the value of electricity generated between solar hours and resource-scarce night hours.
Batteries are a non-generating source and their cost is justified only by the time-shifting value they create. Integrated energy and financial modelling is therefore vital to assess this value before a decision is made.
The mix on a CTU-connected set-up
Central Transmission Utility (CTU)-connected renewable energy plants represent one of the easiest cases for battery integration. Without grid-based banking available, any surplus generation either requires battery storage or is sold in merchant markets. Appetite for merchant markets represents the biggest variable in sizing batteries for CTU-connected projects.
A hybrid solar-wind developer offering 50 MW at a 60 per cent RTC CUF with a 25 per cent merchant market exposure would require no battery. Limiting the merchant market exposure to 5 per cent would require battery storage of over 50 MWh.
A solar-only developer would need a battery five times larger, over 250 MWh, to deliver the same 60 per cent RTC CUF under the same 25 per cent merchant market exposure assumption. Below 50 per cent CUF, the most economical solution is typically no battery at all; a solar-wind hybrid suffices, even when modelled for less than 5 per cent merchant market exposure.
Deciding the mix in states with no battery mandates and banking availability
Battery-based storage would struggle to compete with cheap grid-based banking. Batteries are limited by their capacity and levellised cost, which is much higher than the cost of banking in several states. In Gujarat, where banking is available at a tariff of Rs 1.50 per kWh (as of August 16, 2026), battery-based storage makes limited sense unless high renewable penetration (over 50 per cent) with solar-only generation is desired.
Even in such scenarios, battery addition is driven primarily by the limitations on grid-based banking imposed by the state regulator.
How mandates change the mix
If the CTU network or the Gujarat grid were to introduce battery mandates similar to Maharashtra’s (50 per cent of renewable capacity for two hours), the resulting mix would undersize wind capacities compared to the baseline.
While high levels of renewable penetration would still require all three technologies, wind capacity gets undersized in the low (0-40 per cent) and middle (40-60 per cent) renewable bands as the sunk cost of mandated battery capacity can be recovered only by oversizing solar and storing excess generation in the battery. A solar-battery set-up would be able to deliver it cheaper than a solar-wind-battery set-up in the low-mid bands by almost 20 per cent, making wind economically redundant in these bands.
Battery mandates within states that offer both cheap, unrestricted banking and near-uniform solar and peak hour tariffs can increase the cost of renewable power procurement, reducing its economic value. In Maharashtra, with banking restrictions and large time-of-day tariff arbitrage, the same mandate sets batteries up as genuine economic value creators.
Choosing the right mix, both as a developer and as an industrial consumer, is situation-specific. There is no one-size-fits-all answer. Grid context, policy regime, developer risk and costs, consumer targets and several such variables must be carefully evaluated in order to ensure that renewable energy procurement is more of a value driver than a long-term liability.
Successful projects will be those that model the entire system before committing to a mix.
The article provides directional results from modelling exercises using Minalav. Exact results may vary based on generation profiles, capex, return benchmarks and plant performance.
