NEW DELHI: Record-low bids to ‍build battery energy storage systems in India have sparked fears that some projects could be economically unviable and even pose safety ​risks, industry experts and analysts say, hindering a push for renewable power.

The take-off of battery projects is critical for India's ambition to double renewable energy capacity ⁠to 500 gigawatts by 2030, as its grid operator curtails excess power.

India has tendered out 83 gigawatt-hours (GWh) of battery storage capacity since 2021, but needs to ⁠step ‌up the pace to meet its 2032 need for 236 GWh of storage, industry body the India Energy Storage Alliance (IESA) says.

Of the 83 GWh tendered, nearly 36 GWh of projects have been awarded and 15.4 GWh are in the open ⁠tender stage, while 18 GWh are being built and projects for about 8 GWh have been cancelled.

Experts say that despite India's battery storage ambitions, current trends suggest coal will remain the backbone of its power supply for another decade, pushing it to add more coal power generation beyond 2035.

By September, India had just 500 MWh of battery storage systems operating, IESA said.

 

'KILLING THE GAME'

"This race to provide lowest tariffs ⁠is killing the game," said Debmalya Sen, president ​of ISA.

The absence of technical eligibility criteria from the tender process had drawn in inexperienced players from sectors such as real estate and food processing, he added.

"Established players are ‍turning their backs to such projects."

Recent bids in the leading renewable power state of Rajasthan have come in at less than 1.5 rupees (about 2 U.S. cents) a kilowatt-hour, industry data show.

Such ​a level is "bonkers", said Vivek Bharadwaj, CEO of pathtogreenhomes.com, a consultancy for rooftop solar and storage projects, at just a third of a figure he considered reasonable.

"A healthy value is typically between 2 rupees and 2.2 rupees per unit for fixed costs, and with charging costs, delivered power should be around 4.5 rupees per unit," Bharadwaj added.

 

CHEAPER, LOW-QUALITY BATTERIES

The government is constantly reviewing support policies around storage, Power Secretary Pankaj Agarwal told Reuters, without giving details.

Some prices of about 3.80 rupees per kwh discovered in the tender process are workable, he added.

Lower tariffs are spurring use of cheaper, lower-quality batteries with shorter lifespans, analysts and industry experts said.

At current low tariffs, IESA's Sen said, projects risk relying on "super cheap cells" that raise safety and performance concerns in high-temperature regions.

Experts have been flagging safety concerns over the lithium-ion batteries employed in power and storage projects globally after fires in China, ⁠Japan, South Korea and the United States.

 

FINANCE PLAY

Bharadwaj is working with at least two ‌companies that have won storage tenders but do not plan to build them, instead earning a premium by seeking to sell the projects.

"This entire game has now become a finance play," he said, cautioning that such practices may leave banks stuck with non-performing assets.

IESA is lobbying the power ministry ‌to revise tender guidelines, ⁠adopt technical criteria, and tighten performance benchmarks.

It is also seeking a phased approach to domestic manufacturing incentives, such as a gradual increase in basic customs duty and ⁠targeted support for cell makers. ($1=89.9070 Indian rupees)

(Reporting by Sethuraman NR; Editing by Florence Tan and Clarence Fernandez)