AP Witnessed Lowest Tariff For BESS Projects Backed by VGF: Data

India’s installed capacity of Battery Energy Storage Systems (BESS) above 1 MWh has reached 204.5 MW (505.6 MWh), said latest data from the Ministry of Power. While sharing this date in a written reply to the Rajya Sabha, Minister of State Shripad Naik said six bids were finalised in the financial year 2025-26, each with a 12-year contract period. These projects were backed by viability gap funding of ₹27 lakh per MWh.

According to data shared by the minister, "Andhra Pradesh awarded three tenders and it stands with one of the lowest tariffs for battery energy storage system (BESS) projects, as it secured these projects at the tariff of ₹2.08 lakh, ₹2.10 lakh, and ₹2.22 lakh/MW/Month." 

Rajasthan awarded a 500 MW/1,000 MWh (two-cycle) project at ₹2.16 lakh per MW per month, while Karnataka finalised a 350 MW/700 MWh project at ₹2.49 lakh per MW per month. Gujarat secured a 500 MW/1,000 MWh project at the same tariff of ₹2.49 Lakh/MW/Month."

Uttar Pradesh awarded a 375 MW/1,500 MWh project at ₹3.60 lakh per MW per month (single cycle), while Kerala finalised a project at one of the highest tariffs of ₹4.34 Lakh/ MW/Month.

In comparison, tariffs discovered for recent BESS bids, awarded for a 12-year contract period with Viability Gap Funding of ₹27 lakh/MWh, were lower. Exceptions included the Gujarat tender, which was awarded without VGF, and the Uttar Pradesh tender, which was for 15 years.

BESS Projects

The minister said the Central Electricity Authority (CEA) has not issued guidelines on standardizing rates, technology parameters, or performance for BESS. However, the CEA has released draft amendments to the Central Electricity Authority (Measures relating to Safety and Electric Supply) Regulations, 2025 for stakeholder comments, which include provisions on BESS safety requirements.

According to the CEA’s report on the Weighted Average Rate of Sale of Power for 2023–24, the all-India weighted average electricity price was ₹4.52 per unit for coal-based plants, ₹3.27 for hydro, and ₹3.82 for nuclear.

The cost of electricity from new plants varies depending on factors such as generation source, raw material and fuel costs, and capital investment. The minister added that estimated generation costs stood at ₹5–6 per unit for coal, ₹2.5–3.0 for solar, ₹3–4 for wind, ₹5–6 for hydro, and ₹6–7 for nuclear.