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

Merchant Battery Energy Storage Systems (BESS) in India have become financially viable as of 2024, with potential IRRs of up to 24%. This shift is driven by an 80% decline in battery costs since 2015 and increased price volatility in the Day Ahead Market, where solar oversupply crashes midday prices and high evening demand spikes them. BESS can recover full lifecycle costs through energy arbitrage alone and can further enhance returns by providing fast-acting grid balancing services via the Secondary Reserve Ancillary Services (SRAS) market.

• Merchant Battery Energy Storage Systems (BESS) in India became financially viable starting in 2024, as potential annual revenues from power exchanges exceeded annualised capital costs for the first time.
• BESS costs 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 India's Day Ahead Market (DAM) grew fivefold during the same period, reaching INR 2.4 million/MWh in 2024.
• Merchant BESS projects commissioned in 2024 can achieve an internal rate of return (IRR) of up to 24% through a combination of DAM arbitrage and ancillary services. Even under conservative price-spread assumptions, a system installed in 2024 can achieve a 17% IRR from energy arbitrage alone.
• Shorter-duration BESS (1–2 hours) currently offer higher returns (IRRs of 15–22%) compared to 4-hour systems (13‘18%) because they can more effectively exploit sharp price arbitrage through faster charge-discharge cycles.
• India's Day Ahead Market is experiencing increased price volatility, with prices above INR 9/kWh occurring in approximately 17% of hours (one in six) between 2022 and 2024. Conversely, midday prices have fallen by nearly 20% during summer months from 2022 to 2024 due to solar oversupply.
• BESS can provide critical grid stability through ancillary services, such as the Secondary Reserve Ancillary Services (SRAS). In the SRAS-Down market, BESS can be paid to charge, potentially earning a bonus of up to INR 0.50/kWh for high accuracy in tracking dispatch instructions.
• India's 14th National Electricity Plan (NEP-14) targets the integration of 74 GW / 411 GWh of storage by 2032, consisting of 27 GW / 175 GWh of pumped storage and 47 GW / 236 GWh of BESS.

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} }