India’s energy transition is gaining strong momentum in 2025, powered by record solar capacity additions and a surge in battery storage tenders.
According to Aurora Energy Research, India added 22 gigawatts (GW) of solar capacity in the first half of 2025, while also tendering a record 7.6GW of Battery Energy Storage Systems (BESS). These developments are reshaping India’s renewable energy industry and accelerating the shift toward a more flexible power market.
To guide stakeholders through this rapidly evolving sector, Aurora Energy Research launched its Flexible Energy Market Forecast on August 29. The service provides insights into both co-located and standalone battery projects, leveraging global expertise in financing, development, and deployment trends.
Solar-Battery Synergy and Market Price Dynamics
With solar tariffs dropping to near-zero during daylight hours and power prices spiking to the cap at midnight, battery storage has emerged as a crucial enabler for energy arbitrage. Aurora’s analysis highlights that batteries are increasingly essential to capture these price swings, enabling developers and investors to maximize returns.
The Indian market is also witnessing declining tariffs in standalone battery tenders, intensifying competition among suppliers. This trend is drawing closer attention to differences in battery quality, pricing, and long-term performance.
Battery Technology Choices and Returns
Debabrata Ghosh, Market Head for India at Aurora Energy Research, emphasized that the typical 12-year contract duration for standalone tenders favors Tier-2 batteries due to their competitive tariffs. However, for merchant projects, Tier-1 batteries with longer lifecycles can deliver returns equal to or better than cheaper Tier-2 options. This insight underscores the importance of lifecycle economics when evaluating battery investments.
Operational Parameters Driving Viability
Siddhant Shah, Research Associate at Aurora Energy Research, noted that auxiliary power consumption—which fluctuates with ambient temperature—plays a critical role in assessing project viability. Aurora’s research indicates that in hot regions like Gujarat and Rajasthan, unlevered returns for merchant co-located solar and storage projects can be up to six percentage points higher than those developed under tendered contracts, provided the solar-battery sizing is optimized.
Outlook for India’s Flexible Energy Market
As India scales up renewable energy deployment, battery storage will be the backbone of flexibility in the power grid. The combination of record solar additions, falling battery tariffs, and evolving financing models signals a transformative decade ahead. Aurora Energy Research’s Flexible Energy Market Forecast equips investors, developers, and policymakers with critical insights to navigate opportunities and challenges in this dynamic market.
Baburajan Kizhakedath