What Is the Cost of BESS in India?

Battery energy storage systems are transitioning from pilot projects to large-scale rollouts across India. As the penetration of renewables increases, utilities and developers are actively considering BESS solutions to help stabilize the grid, manage peak demand, and facilitate solar and wind power adoption. As expected, the first question that comes to the minds of those considering BESS solutions during the planning phase is, what is the cost of a BESS solution in India?

The answer to this question is complex, as the price of a BESS solution can differ depending on the capacity, duration, chemistry, and whether the solution is a containerized energy storage solution or a custom-built solution. However, the overall cost of a BESS solution can be understood by considering the trends in the market, policy, and technology.

Average BESS Cost in India

For utility-scale BESS, costs in India are normally quoted on a basis of USD/kWh or INR/MWh for energy delivered. For lithium-ion-based energy storage systems for grid applications, which is the most common type of battery energy storage system, based on recent project awards, fully integrated battery energy storage systems can be broadly categorized within the following cost ranges for different duration energy storage systems:

• 1-hour duration energy storage systems: Low upfront cost but less flexibility
• 2-hour duration energy storage systems: For smoothing renewable energy
• 4-hour duration energy storage systems: For peak shifting and grid support applications

For practical purposes of procurement for battery energy storage system projects in India, costs can be broadly categorized within the following components of a battery energy storage system:

• Battery modules
• Battery management system
• Power conversion system
• Thermal management system
• Container enclosure (in case of energy storage system deployment within a containerized energy storage system)
• Installation and commissioning costs
• EMS and SCADA integration

Because of these bundled components, comparing cell cost alone does not reflect actual project cost.

Cost Breakdown of a Base Energy Storage System

Knowledge of how a basic energy storage system is priced can provide an understanding of the reason behind the varying costs of BESS. A grid-scale BESS generally comprises various major cost contributors.

Battery Cells and Modules

Battery cells constitute the costliest part of the battery storage system. Lithium-ion battery technology is particularly prevalent in India due to its high safety standards and long lifespan. However, as manufacturing of these batteries increases globally, their cost is decreasing.

Power Conversion System

The PCS is required to convert AC power supplied by the grid to DC power stored in the battery and vice versa. The cost of this component is directly proportional to the power rating of the BESS.

Containerized Energy Storage System Enclosures

Containerized energy storage systems make the installation process easy and minimize engineering time. These containerized energy storage systems have batteries, cooling systems, fire protection, and monitoring in one container. Even though containerization increases the cost of equipment slightly, it can minimize engineering and installation costs.

Balance of Plant and Integration

This refers to transformers, cabling, civil work, and communication. In India, site conditions vary greatly. This implies that the cost of integration can vary greatly depending on land preparation and grid connection.

Key Factors Influencing BESS Pricing in India

Several factors influence the ultimate cost of a BESS project.

System Duration

The duration of an energy storage system plays an important role in cost. A 4-hour duration system requires twice as much battery as a 2-hour duration system. However, it does not need twice as much inverter material. Therefore, there is a small reduction in cost per kWh but an increase in overall cost.

Project Scale

As mentioned earlier, larger projects enjoy economies of scale. A 100 MWh containerized energy storage project will cost less per unit than a 10 MWh project.

Import Dependence

India is highly dependent on lithium-ion imports. This leads to currency risks as well as import duty costs. However, it is believed that manufacturing initiatives in India will reduce these costs in due course.

Grid Application

Frequency regulation projects might require power prioritization, whereas renewable shifting projects might require prioritization of energy.

Containerized Energy Storage System vs Custom BESS Cost

Containerized energy storage solutions are increasingly preferred for mid-size and large projects in India. The cost comparison between containerized and custom solutions generally includes the following factors:

• Faster installation schedule
• Engineering complexity reduction
• Labor reduction at the project site
• Standardized safety solutions

Although the equipment prices of containerized solutions are slightly higher, the overall project cost is competitive due to the reduction in labor requirements.

In the case of solar or wind power project developers who have multiple projects, standardized containerized energy storage solutions can reduce the overall lifecycle cost of the project, including the engineering cost.

Market Trend for Cost Reduction of BESS

The policy and the growing renewable energy segment are driving the Indian storage segment, which is witnessing rapid growth. As the segment grows, the prices are coming down due to increased procurement and manufacturing scale.

The study titled India Energy Outlook 2021, published by the International Energy Agency, finds that large-scale battery storage is expected to play a crucial role in supporting India’s expanding renewable capacity, with cost reductions accelerating as deployment volumes increase. This trend reinforces expectations that BESS pricing will continue to decline as more projects reach commercial scale.

Typical Use Cases Affecting Cost Justification

The cost of BESS must also be assessed in relation to its value. Some of the applications in India include:

Renewable Energy Firming

Renewable sources such as solar and wind are prone to curtailment risks due to their variability. BESS can be used to shift the supply of energy to peak periods of demand. This increases the revenue of the plant and justifies the high cost of the BESS.

Peak Shaving of Industrial Consumers

Large commercial consumers of energy often use BESS to reduce peak demand charges. Even high costs of BESS can provide high returns in such applications.

Grid Stability and Ancillary Services

Utilities often use BESS to provide frequency response and voltage stability services. Such applications often involve high power response, impacting cost distribution.

Future Outlook for BESS Cost in India

The cost of BESS in India is anticipated to decrease further in the next ten years. There are several factors that are contributing to this:

• More domestic battery manufacturers will be involved in the market.
• More utility-scale procurement will be done.
• Standardization of containerized energy storage systems.
• Better cycle life of batteries.
• More competition in the integrator market.

However, the cost of long-duration storage needs could rise in spite of the decrease in the cost of the batteries.

How to Estimate BESS Project Cost

While planning a project, the following parameters are generally taken into consideration:

• Required energy capacity (MWh)
• Discharge duration (hours)
• Grid connection voltage level
• Site civil conditions
• Operational strategy

By considering all the above parameters, a more realistic project estimation can be obtained instead of considering general price benchmarks.

Conclusion

The cost of BESS in India varies depending on the size of the system, duration, scope of integration, and whether a containerized energy storage system is implemented or not. Even though the price of a turnkey project is reducing, the overall project economics must be taken into consideration by the project developer, as the overall project economics provide a better picture of the project than the equipment cost alone. To proceed with the project, the required duration of storage must be identified, and quotations must be obtained from the turnkey suppliers to ensure that the overall BESS cost analysis is aligned with the project requirements.