DEFERRED EDGE. Battery energy storage systems are rapidly gaining ground in the renewable energy ecosystem | Photo Credit: Petmal

The year 2025 was the ‘year of solar’, when India’s solar power sector broke many records. Now, 2026 is likely to go down in history as the ‘year of energy storage’ — because recent developments in battery energy storage systems (BESS) offer some important cues.

At the dawn of the year, government-owned Solar Energy Corporation of India (SECI) announced the results of a ‘solar-plus-storage’ tender floated last year for setting up 1,200 MW of solar capacity and 600 MW/3,600 MWh of storage. Four companies emerged winners: Engie India and NLC India Renewables won 200 MW and 600 MW, respectively, quoting a tariff of ₹3.12 a kWh; and RaysPower Infra and Oriana Power secured 300 MW and 100 MW, respectively, at ₹3.13 a kWh.

Myth breaker

One feature of this tender distinguished it from previous ‘solar-plus-storage’ bids — it required developers to be ready to supply peak power for six hours. Battery storage for six hours? Until recently, it was widely believed that batteries could store only enough energy for four-hour discharge.

“The results of this tender have broken the myth that batteries can be relied upon for a maximum of four hours of supply,” Debmalya Sen, President of the Indian Energy Storage Alliance (IESA), told businessline. He noted that this was the first time in India that a tender had called for a BESS capable of delivering power for six hours.

The tariffs, too, came as a surprise. Solar-plus-storage projects with four-hour discharge have been won earlier at around ₹2.86 a kWh. Few would have expected a six-hour discharge to come in at ₹3.12 — a highly competitive price. In recent months, coal-based projects have secured tariffs of ₹6.70 a kWh (Adani Power and JSW Power), while energy discharged from pumped storage projects (PSPs) typically costs around ₹4 a kWh.

Though battery prices have been falling steadily, the winning tariffs in this tender underline that BESS has firmly established itself in the renewable energy ecosystem. Typically, electricity from BESS costs ₹8–9 a kWh, while daytime solar power costs around ₹2.5 a kWh. The tariffs quoted by bidders effectively average the cost of solar generation during the day and stored energy supplied during non-solar hours.

(As per tender conditions, the solar power developer must install BESS capacity equivalent to at least half the contracted solar capacity, with a discharge duration of three hours. For instance, NLC India Renewables, which won for 600 MW capacity, will have to set up 300 MW/1,800 MWh of BESS. Power will be supplied through the day, with payments made at the discovered tariff. While the buyer may draw any amount of energy, developers are guaranteed at least one hour of full offtake.)

New benchmark

This long-duration storage tender, with tariffs of ₹3.12–3.13, is expected to set a benchmark for future auctions. Rajasthan has already announced one — for 2,450 MW of solar coupled with 1,600 MW/4,000 MWh of energy storage — at the Pugal Solar Park in Bikaner.

More is in the pipeline. The Central Electricity Authority estimates that India will require 336 GWh of storage capacity by 2029–30 and 411 GWh by 2031–32 to enable the smooth integration of renewable energy. According to IESA, India has already tendered about 212 GWh of storage capacity — 87 GWh of BESS and 124 GWh of PSP.

BESS vs PSP

Will BESS dominate the storage sector and marginalise PSPs? Experts such as Sen insist it is wrong to view this as a BESS-versus-PSP contest, since each has its own role. Still, BESS does appear to be eating into PSP territory.

PSPs traditionally held one key advantage — longer discharge durations. The SECI tender results suggest that this gap is narrowing. Government data show that around 51 GW of PSP capacity is currently at the ‘survey and investigation’ stage. Sen described the SECI results as a “wake-up call” for PSP developers and agreed that they may need to revisit their business models.

That said, PSPs have strengths of their own. One leading PSP developer, who requested anonymity, pointed out that utilities could still benefit by buying cheap solar power during the day, storing part of it in pumped storage plants, and drawing it during peak hours. PSPs remain more competitive than BESS in terms of the cost of stored energy — ₹4–5 a kWh, compared with ₹8–9 for batteries.

As other technologies, such as flow batteries, enter the market, it will be interesting to see how their relative merits play out. But regardless of which technology gains the upper hand, 2026 looks set to be remembered as the ‘year of energy storage’.

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Published on January 19, 2026