Understanding the Storage Tariff
A low battery storage bid does not automatically translate into low-cost delivered electricity.
Firstgreen’s latest report examines Haryana’s 265 MW / 530 MWh Battery Energy Storage System (BESS) auction, where the lowest bid (L1) was reported at ₹2.35 lakh per MW per month.
At full billing, this translates into approximately ₹74.73 crore in annual capacity fees. However, this represents capacity-fee revenue, not project profit.
What Is the Cost per Unit of Delivered Electricity?
In Firstgreen’s beginning-of-life illustration, two full cycles per day result in a capacity charge of approximately ₹1.93/kWh.
When charging electricity is assumed to cost ₹3/kWh, with a round-trip efficiency of 85%, the selected costs rise to approximately ₹5.46/kWh.
This estimate excludes network charges, taxes, and other costs. It therefore should not be interpreted as the complete cost of delivered electricity.
The Bigger Question: Is the Project Bankable?
The long-term viability of a storage project depends on more than its auction tariff. Key considerations include:
- Construction costs: Can the project be delivered within its budget?
- Grant timing: Will financial support arrive when required?
- Operating performance: Can the system consistently meet its contracted obligations?
- Financing: Can project cash flows support financing costs and the contracted capacity fee?
These factors determine whether a competitive auction bid can translate into a financially sustainable project.
Conclusion
India’s battery storage market needs to look beyond headline tariffs and evaluate the assumptions that underpin project economics.
The key question is not simply how low the bid is, but whether the project can deliver its contracted service sustainably over time.
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