Eyeing the huge potential for manufacturing Battery Energy Storage System (BESS) in India, Gujarat-based solar module manufacturer, Kosol Energie Pvt Ltd, is planning to invest more than ₹2,000 crore in setting up a unit for manufacturing battery-cells-cum-packs.

“For setting up a BESS manufacturing unit, we will need a large land parcel and so we are exploring Rajasthan, Madhya Pradesh and Gujarat for this project. The Prismatic cell will be our main product for battery-cell. It will be a large investment and we will need government support for the same,” said Kalpesh Kalthia, Chairman and Managing Director, Kosol Energie. The company has a 3.1-GW solar module manufacturing facility at Bavla near Ahmedabad that exports modules to the US market.

Kosol, with its proposed 2GWh BESS plant, is not alone in the fray. Apart from players like Reliance Industries and Jindal India Renewable Energy who have announced larger BESS projects, Rajkot-based solar module manufacturer Onix Renewable is also considering setting up a BESS manufacturing unit in the near future. “We have a plan to get into BESS manufacturing in the future,” said Hardik Adhiya, Chief Operating Officer, Onix Renewable. The company currently imports the BESS systems from China for its EPC projects.

“If you see the current tenders for renewable energy projects, 80 per cent of them have provisions for BESS, which will play an important role in grid availability and stability. Another reason behind BESS is to provide renewable energy to farmers during day time and to industries after night fall. Currently, we have to depend on imports as there are a handful of BESS manufacturers, but as more indigenous manufacturers set up shop, the cost of these systems are expected to fall 30-40 per cent,” said Adhiya.

Inflection point

Pointing out that the India’s BESS manufacturing is still at a nascent stage, Atanu Mukherjee, CEO, Dastur Energy, a company that conceptualises, designs and develops clean energy transition and carbon management solutions, said, “India’s BESS manufacturing sector is at a critical inflection point. The country is transitioning from a reliance on imported lithium-ion cells for battery pack assembly to developing fully-integrated domestic gigafactories capable of cell-to-pack manufacturing, chemical processing and supply chain localisation. Several major initiatives are underway. Reliance Industries is building a 30-GWh integrated gigafactory at its Jamnagar Green Energy Complex, with battery pack assembly expected to begin in 2025 and cell manufacturing and upstream chemical production starting by 2026-27. Jindal India Renewable Energy (JIRE) is similarly targeting 1 GWh of pack assembly by 2025, followed by 5 GWh of domestic cell production by 2027.”

The efforts are supported by the Government of India’s Advanced Chemistry Cell (ACC) Production Linked Incentive (PLI) Scheme. According to the National Electricity Plan (2023), the Centre targets 236-GWh BESS capacity by 2031-32. Speaking about the cost of BESS systems, Mukherjee says India’s BESS systems assembled locally are more expensive than the imported ones.

“As of mid-2025, the total installed capital cost of utility-scale four-hour LFP (lithium iron phosphate) BESS in India ranges from ₹20,000 to ₹22,000 per kWh ($240-260/kWh). This includes battery modules, inverters, balance of system (BOS) components, civil and electrical infrastructure and applicable taxes. A significant share—nearly 80 per cent—of this cost is driven by the import of lithium-ion cells, given India’s limited domestic cell manufacturing capacity. On the other hand, fully-imported turnkey BESS systems procured through global vendors can cost around $210-220/kWh, primarily due to advantages in supply chain integration, scale efficiencies and the absence of Indian import duties and local construction overheads. And hence the urgent need for a robust domestic cell manufacturing ecosystem,” he said.

High capital costs

The impact of capital costs is most evident in the levelized cost of storage (LCOS), a metric used to gauge the cost-effectiveness of energy storage technologies. “At an installed cost of ₹21,000/kWh, with a 10-year asset life, 10 per cent discount rate, 85 per cent round-trip efficiency and a typical utilisation of around 300 cycles per year, the LCOS is estimated to be around ₹16-17 per kWh. Even at a slightly lower capital cost of ₹19,000/kWh, the LCOS remains close to ₹15 per kWh. These levels make energy storage economically viable, but limits it to specific high-value applications, such as grid balancing, frequency regulation or solar smoothing—rather than for arbitrage or bulk renewable firming,” said Mukherjee.

However, the outlook for BESS in India is steadily improving. By 2030, with domestic lithium-ion cell manufacturing expected to mature and scale—through investments by companies such as Reliance and JIRE —the installed capital cost of BESS could decline by over 50 per cent to less than ₹10,000–12,000/kWh (US $120–145/kWh).

“At these levels, and with continued typical cycling of 250–300 times per year, the LCOS will fall to ₹9-11 per kWh. This would make storage competitive for a broader range of grid applications, including solar time-shifting, evening peak support and deferral of transmission upgrades,” he said, adding that further improvements in energy density, system integration and co-location with low-cost renewables could further reduce costs of BESS.

Published on June 24, 2025