India’s Battery Storage Costs Plummet Amid New Initiatives
The cost of Battery Energy Storage Systems (BESS) in India is witnessing a remarkable decline. According to recent announcements from the Ministry of Power, the price of BESS obtained through competitive bidding in 2022-23 was around ₹10.18 per kWh for two daily cycles. However, this figure has significantly reduced, now standing at approximately ₹2.1 per kWh, assuming the storage is utilized for the same frequency. Market trends suggest that optimal usage may settle at 1.5 cycles per day, pushing the storage cost to ₹2.8 per kWh. In context, the average electricity rate from solar projects currently hovers around ₹2.5 per kWh.
Government Initiatives to Lower Storage Costs
To enhance the affordability of battery storage, the Ministry is spearheading a Viability Gap Funding (VGF) scheme aimed at establishing a substantial 13,220 MWh of BESS capacity, backed by a financial allocation of ₹3,760 crores. Furthermore, a second VGF initiative was launched in June 2025 to support the development of an additional 30 GWh of BESS, with a financial commitment of ₹5,400 crores sourced from the Power System Development Fund (PSDF).
Incentives for Transmission Projects
In a bid to further encourage investment in co-located BESS projects, the government is providing a waiver of Inter-State Transmission System (ISTS) charges for up to 12 years for projects scheduled to be commissioned by June 2028. For those opting for non-co-located configurations, ISTS charge waivers will apply to projects completed before June 2025, with a structured reduction expected annually thereafter.
Boosting Domestic Manufacturing
As part of a broader strategy to strengthen India’s battery manufacturing base, the Ministry of Heavy Industries is implementing the Production Linked Incentive (PLI) scheme, centered on the National Programme on Advanced Chemistry Cell (ACC) Battery Storage. This initiative aims to create a formidable 50 GWh of domestic manufacturing capacity for advanced battery cells, with 10 GWh specifically designated for grid-scale stationary storage applications. Launched in May 2021, this scheme is supplemented by a total funding of ₹18,100 crore. The PLI scheme is designed to stimulate investment in local battery cell production, which will help decrease reliance on imports over time and ultimately lower BESS costs for consumers. This information was presented by Minister of State for Power, Shri Shripad Yesso Naik, in a formal reply during the recent Rajya Sabha session.
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