The age of storage: Batteries primed for India’s power markets

Merchant BESS in India became financially viable in 2024 due to falling battery costs and increasing price volatility in the Day Ahead Market (DAM). The report finds that BESS can achieve internal rates of return (IRR) up to 24% by combining energy arbitrage with ancillary services, with shorter-duration systems (1-2 hours) currently offering better returns than 4-hour systems.

• Merchant battery energy storage systems (BESS) in India became financially viable in 2024, as this was the first year that potential revenues from power exchange participation exceeded annualised capital costs.
• BESS projects commissioned in 2024 can achieve an internal rate of return (IRR) of up to 24% through a combination of Day Ahead Market (DAM) arbitrage and ancillary services. Arbitrage typically contributes 80-85% of total earnings, while ancillary services provide 15-20%.
• Shorter-duration BESS (1-2 hours) currently offer higher IRRs (15-22%) compared to 4-hour systems (13-18%) because they can more effectively exploit sharp, short-lived price peaks and troughs through faster charge-discharge cycles.
• Battery costs in India have decreased by 80% since 2015, falling from approximately INR 7.9 million/MWh to INR 1.7 million/MWh in 2025. Simultaneously, potential revenues from the Day Ahead Market grew fivefold over the same period, reaching INR 2.4 million/MWh in 2024.
• Price volatility in India's Day Ahead Market is increasing, with the gap between average mid-day and late evening prices rising from INR 1.5/kWh in 2019 to INR 5.5/kWh in 2025 for January. Peak prices above INR 9/kWh occurred in approximately 17% of hours in 2024.
• BESS can provide critical grid stability by filling gaps in ancillary services. In May 2025, India experienced systemic issues where downward reserves were near zero for five mid-day hours on May 26, and upward reserves were zero for three hours late at night.
• The decline in solar capture rates on the IEX Day Ahead Market—from 93% in 2019 to 70% in 2024—threatens the financial viability of merchant solar and may force higher tariffs for Firm and Dispatchable Renewable Energy (FDRE) projects.

APA

Das, D., & Rodrigues, N. (2025). The age of storage: Batteries primed for India’s power markets. Ember. https://ember-energy.org/app/uploads/2025/08/The-age-of-storage-Batteries-primed-for-Indias-power-markets.pdf

Chicago

Das, Duttatreya, and Neshwin Rodrigues. The age of storage: Batteries primed for India’s power markets. Ember, 2025. https://ember-energy.org/app/uploads/2025/08/The-age-of-storage-Batteries-primed-for-Indias-power-markets.pdf.

Wikipedia

{{cite report |last1=Das |first1=Duttatreya |last2=Rodrigues |first2=Neshwin |title=The age of storage: Batteries primed for India’s power markets |publisher=Ember |date=5 August 2025 |url=https://ember-energy.org/app/uploads/2025/08/The-age-of-storage-Batteries-primed-for-Indias-power-markets.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{das2025age, author = {Das, Duttatreya and Rodrigues, Neshwin}, title = {{The age of storage: Batteries primed for India’s power markets}}, institution = {Ember}, year = {2025}, month = aug, url = {https://ember-energy.org/app/uploads/2025/08/The-age-of-storage-Batteries-primed-for-Indias-power-markets.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }