Stories
Rising Battery Prices Squeeze India's Energy Storage Projects, Threatening Delays
- •A rebound in battery prices is pressuring the returns of India's battery energy storage projects, especially those awarded at low tariffs when costs were falling.
- •Around 8-9 GWh of awarded BESS capacity faces a higher risk of delays due to increased raw material costs, stronger global demand, and supply-chain pressures.
- •Utility-scale LFP battery systems are now quoted at $70-$75 per kilowatt-hour, impacting projects that assumed continued price drops.
- •Crisil Ratings indicates nearly 21% (12 GWh) of under-construction BESS capacity faces weak returns, with some projects unable to achieve the targeted 12%-14% IRR.
- •Despite challenges, India's battery storage market is projected for rapid growth, with 50-55 GWh of BESS capacity expected to be commissioned in FY27 and FY28.
Key Questions Answered
Battery prices in 2026 have increased due to higher raw material costs, stronger global demand, currency movements, and supply-chain pressures. Additionally, China has reduced its export tax rebate on battery products, and lithium prices have surged significantly.
A Crisil Ratings analysis revealed that nearly 21% of under-construction battery energy storage system capacity, which amounts to about 12 GWh, faces weak returns. Furthermore, approximately 8-9 GWh of this capacity also faces a higher risk of delays due to limited implementation experience among project sponsors.
Around 45-50 GWh of battery energy storage system capacity is expected to be commissioned in FY27 and FY28, compared to about 1 GWh in FY26. Overall, 50-55 GWh of BESS capacity is scheduled for commissioning during those two years.
