The Latest SJVN Auction Drives “Solar plus 4-hour Energy Storage Solution” Tariff to a New Record Low
Energy storage projects are designed to capture energy at a certain time, store it, and make it available to the off-taker for later use. Over the past couple of years, “Solar coupled with Energy Storage Systems – (Solar + ESS)” has become one of the key segments of the grid-scale ESS market.
The latest reverse auction has resulted in a record low tariff of Rs 3.32 per unit for a “Solar + 4-hour ESS”. This tariff was achieved in a tender by SJVN Ltd for a project that includes 1200 MW of solar power combined with 600 MW/2400 MWh of energy storage. This newly discovered tariff is approximately 5.8% lower than a similar tender auctioned by SECI in December 2024. Notably, the tariff discovered is identical to those found in the latest auctions of wind solar hybrid (WSH) and significantly lower than vanilla wind tenders.
Figure 1: Utility-scale “Solar + ESS” tender auctions in India
Source: Tendering Authorities, JMK Research
The recent “Solar + ESS” auction results highlight the growing importance of co-locating solar with energy storage projects. A February 2025 notification by the Ministry of Power (MoP) further emphasizes this importance by mandating a minimum of 2-hour co-located ESS, equivalent to 10% of the installed solar project capacity, in future solar tenders. The “Solar + ESS” projects set up under these tenders will be primarily used for their energy-shifting applications, due to the wide mismatch between the hours of peak solar generation and peak power demand.
Although most utility-scale “Solar + ESS” tenders issued so far are technology-agnostic, the requirement for solar co-location, along with a short commissioning timeline of 24 months, will likely favor battery energy storage systems (BESS). The continuous decline in battery prices has been the primary factor driving down the discovered tariffs. For instance, since June 2024, the global cost of Lithium Iron Phosphate (LFP) cells has decreased by approximately 6% as of April 2025.
Bloomberg predicts that battery prices will continue to decline, potentially reaching around US$ 112 per kWh by the end of 2025. Consequently, tariffs for “Solar + ESS” tenders are expected to decrease in tandem throughout this period. However, the implementation of Approved Models of Cell Manufacturers (ALCM) in Indian solar projects starting in June 2026 could lead to an uptick in tariffs until the domestic cell manufacturing sector catches up.
Looking ahead, as variable renewable energy (VRE) grid penetration increases, “Solar + ESS” is likely to become a standard design in solar tenders. This shift will play a crucial role in India achieving its target of installing 47.2 GW of battery energy storage systems by 2031-32, ultimately paving way for smooth and sustainable integration of 500 GW of RE into Indian grid by 2030.