India’s clean energy ambitions are driving rapid growth in Standalone Energy Storage Systems (ESS), with 6.1 gigawatts (GW) of tenders floated in the first quarter of 2025, accounting for 64% of all utility-scale energy storage tenders, according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics.
“Standalone ESS are ideal to facilitate the rapid development and deployment of variable renewable energy (VRE) resources across India. Energy storage is integral to renewable integration and grid resilience, and Standalone ESS will play a defining role in shaping a reliable and flexible energy system,” says the report’s contributing author, Charith Konda, Energy Specialist – India Mobility and New Energy, IEEFA.
“They operate as flexible, independent assets that can respond to grid requirements rather than generator constraints, offering network stability and optimising energy use,” he added.
The government’s viability gap funding (VGF) scheme, which offers up to 30% support to project developers for capital expenditure on standalone BESS projects, has been a key driver of the surge in Standalone ESS tenders.
“This initiative has addressed high initial project capital expenditure (CAPEX) of BESS projects and enhanced project viability. The VGF framework has also made projects more economically viable,” says the report’s co-author, Prabhakar Sharma, Senior Consultant, JMK Research & Analytics.
“In recent auctions, battery energy storage system tenders in Maharashtra and Rajasthan secured tariffs as low as Rs219,000-221,000 per megawatt (MW) a month (US$2,561-$2,586/MW/month), representing almost a 40% reduction compared with non-VGF projects with similar specifications,” he added.
While utilities, grid operators or third-party entities can own and deploy Standalone ESS, innovative new business models are emerging. Energy Storage as a Service (ESaaS) lowers the entry barrier for users by offering storage as a service through subscription or pay-per-use arrangements.
The heightened interest in Standalone ESS is attracting new players to the sector. Large, established power producers such as JSW Energy, Greenko and Torrent Power have been joined by newer entrants Pace Digitek, Oriana Power, Kintech Synergy and Bondada Engineering with Battery + ESS (BESS)-based tenders.
While the initial growth has been impressive, the nascent Standalone ESS market is not immune to the challenges facing other sectors of India’s energy transition.
“A key barrier has been the delay or cancellation of power sale and storage agreements, often triggered by offtakers anticipating further tariff reductions due to falling battery prices,” says the report’s co-author, Pulkit Moudgil, Research Associate, JMK Research & Analytics. “These uncertainties have already led to the cancellation of 6.4GW of awarded capacity.”
The report also highlights several structural barriers in the market. These include a limited number of utility-scale equipment vendors, a lack of domestic battery cell manufacturing and heavy reliance on critical mineral imports like lithium and cobalt. This dependence creates exposure to global price fluctuations and geopolitical risks. Additionally, smaller developers struggle to secure affordable project financing due to investor caution regarding early-stage risks and long payback periods.
“Looking ahead, India’s Standalone ESS market stands at a critical inflexion point,” says Sharma.
“With the right mix of sustained policy support, streamlined regulatory processes, and targeted investments in domestic manufacturing and supply chains, the sector can overcome early-stage barriers and unlock its full potential,” he adds.
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