Who Pays, Who Builds, Who Carries the Risk: Reading a Storage Deal

The Situation & Reported June 2026 Deals

India's storage pipeline is large and mostly uncommissioned, as our Energy package described. To understand why, it helps to look at how a typical deal is structured. IEEFA's key findings for June 2026 listed several. We do not have the contracts; we use IEEFA's descriptions, and we label our reconstruction as ours.

The deals reported for June 2026: • Gujarat's utility, GUVNL, signed battery energy storage purchase agreements for 335 MW/670 MWh with Advait, Sun Drops and Equentia at tariffs of about Rs 2.10 to 2.12 lakh per MW per month. • A renewable-plus-storage power purchase agreement with BESCOM, covering 250 MW of solar and 250 MW/1,100 MWh of storage, had an interim tariff of Rs 5.51 per kWh over 25 years, supported by viability gap funding. • Onward Solar signed a 45 MW/180 MWh agreement with GRIDCO. • Bondada Engineers won an EPC contract of Rs 1,338 crore for 250 MW of solar with 50 MW/200 MWh of storage in Sitapur, Uttar Pradesh, and Ganesh Green Bharat won a 1,000 MWh EPC order from NTPC REL. • Maharashtra's utility tender for 2,000 MW/4,000 MWh has a one-cycle daily pattern and a 15-year tenure. Viability gap funding of up to Rs 18 lakh per MWh supports 2,900 MW of tenders.

Deal Structure Reconstruction & Cashflow Arithmetic

The structure: our reconstruction: In a standalone storage deal like Gujarat's, a developer builds and operates a battery. A utility agrees to pay a fixed monthly charge per megawatt of capacity made available, and controls when the battery charges and discharges. The developer's revenue is the capacity payment, as long as the battery is available when called. An engineering, procurement and construction (EPC) contractor builds it. Viability gap funding from the government covers part of the capital cost, reducing the tariff the utility pays.

Our arithmetic: 335 MW at Rs 2.10 to 2.12 lakh per MW per month implies Rs 7.04 to 7.10 crore a month, or Rs 84.4 to 85.2 crore a year. A 670 MWh/335 MW system is a two-hour battery. If the agreement lasts 12 years, an invented tenure for illustration (the 15-year tenure is for the Maharashtra tender), the total payments would be roughly Rs 1,013 to 1,022 crore. The Bondada EPC contract of Rs 1,338 crore covers solar and storage together, so it cannot be compared with the storage payments. The BESCOM interim tariff of Rs 5.51 per kWh is a price for energy from the combined project over 25 years.

“A signed contract is not a working battery.”

Where the Risks Sit & Contract Observations

Where the risks sit: 1. Developer: cell prices, which IEEFA reported rising for four months to about US$55 per kWh ex-works in China, and equipment delivery. 2. Utility: having a battery available when needed, and the cost of the payments over many years. 3. Contractor: execution and cost overruns on a fixed-price contract. 4. Government: the cost of viability gap funding. 5. Everyone: degradation of the battery over time, and the duration. IEEFA noted that two-hour systems dominate, and four-hour systems are gaining after the Ministry of Power's clarification.

What the case shows: Contracts are being signed, which is evidence of real activity. The tariffs for standalone storage are fixed capacity payments, which protect developers from energy price risk but expose them to equipment price risk. Subsidy is part of the structure. The EPC awards show a supply chain in India building to scale.

Unresolved Implementation Hurdles & Strategic Lessons

What is unresolved: • Commissioning. IEEFA reported that only about 10.3 GW of the 103.4 GW tendered had been commissioned. A signed contract is not a working battery. • Cell supply. India has about 2.5 GWh of cell capacity against about 60 GWh of pack assembly, so cells are mostly imported. • Unsigned power purchase agreements. IEEFA reported a proposal for about 44.8 GW of renewable capacity with award letters and no signed agreements.

Lessons: • Who bears equipment price risk decides who bids. Fixed tariffs with rising cell prices squeeze developers. • Duration shapes value. Two hours and four hours are different products. • Subsidy design matters. Viability gap funding changes the price utilities see.

Discussion Questions & Industrial Peak Shaving Exercise

Discussion questions: 1. If cell prices keep rising, who should bear the cost: the developer, the utility or the taxpayer? 2. Should utilities pay for availability, performance, or both? 3. What information would you require before agreeing to a 25-year price?

At your scale: an exercise (invented numbers): An invented factory, Brightline Metals, considers a 1 MW/2 MWh battery to shave evening demand charges. The battery costs an invented Rs 4 crore. It saves Rs 60 lakh a year in charges and avoids Rs 20 lakh of outage losses, a total of Rs 80 lakh. The simple payback is 5 years (4 crore / 0.8 crore). If cell prices rise and the battery costs Rs 4.6 crore, payback is 5.75 years. If a subsidy covers 20% of the cost, the cost is Rs 3.68 crore and payback 4.6 years. All figures are invented. The exercise shows how sensitive a project is to price and subsidy.

What we do not know: We do not know the full terms of any of these contracts, the tenures of the Gujarat agreements or the subsidy amounts per project.