India’s Firm Renewable Energy Auctions: Setting a New Benchmark for Solar-Plus-Storage Investments

Abstract

India’s renewable energy landscape is entering a new phase where firm, dispatchable power is no longer a distant goal but a commercially viable reality. This paper analyses the landmark 600 MW solar-plus-880 MWh battery project at Morena Solar Park in Madhya Pradesh—India’s most competitive Firm & Dispatchable Renewable Energy (FDRE) tender to date—and benchmarks it against recent RTC, hybrid, and storage-linked auctions. Drawing on the authors’ own techno-economic evaluation and a synthesis of government tender documents, regulatory filings, and market reports, the study highlights how innovative procurement design—pre-approved land, integrated evacuation, three-tier payment security, and night-time grid charging—enabled record-low tariffs of ₹2.70–2.76/kWh, undercutting the operating cost of new coal-based peakers. Comparative analysis with other FDRE and RTC projects reveals the decisive role of charging flexibility, capacity-utilization factors, and risk allocation in shaping project economics. The findings demonstrate that with the right policy architecture, dispatchable renewable energy can deliver firm, peak-hour power at scale, aligning investor returns with India’s decarbonization and energy-security goals.

Introduction

As of mid Q3-2025, India has crossed 250 GW of installed non-fossil electricity capacity, achieving 50% non-fossil share in its total capacity well ahead of its 2030 goal.  Under its commitments under the Paris Agreement, the country is targeting 500 GW of non-fossil energy capacity by 2030, energy independence by 2047 and net-zero emissions by 2070. These ambitious targets are driving a paradigm shift from simply building solar and wind farms toward securing firm, dispatchable renewable energy. The rise of auctions calling for solar plus storage, Round-the-Clock (RTC) renewables, and particularly Firm & Dispatchable Renewable Energy (FDRE) projects reflects the urgent need to match supply with peak demand and reduce dependence on coal and fossil fuel peakers.

India’s clean-energy market is entering a decisive new phase where firm, dispatchable renewable power is no longer a pilot concept but a bankable reality. A series of recent auctions for Firm and Dispatchable Renewable Energy (FDRE) projects—solar plants integrated with large-scale battery energy storage systems (BESS)—demonstrates how policy design, payment security, and charging flexibility can make or break project economics.

Utility-Scale Renewable Structures: Technical and Economic Overview

(a) Normal Solar: Utility-scale Photo-Voltaic (PV) projects deliver whatever electricity the sun produces without any obligation to meet fixed schedules or output levels. Grid operators classify them as “must-run” resources, requiring DISCOMs to absorb variable generation and arrange balancing capacity separately. The configuration is straightforward—PV modules, inverters, step-up transformers, and grid interconnection—no storage or firming assets. Developers bid only a power-purchase tariff, and typical Capacity Utilization Factor (CUF) in India is 17–23 %, depending on irradiation and module efficiency. With the buyer carrying all balancing risk, these plants achieve the lowest capex and O&M costs, routinely clearing auctions at ₹2.5–₹2.9/kWh.

(b) Solar-Plus-Storage (Non-Firm): This format co-locates a PV plant with a Battery Energy Storage System (BESS) but does not commit to guaranteed output. The battery is mainly for energy shifting—charging from daytime solar and discharging in the evening—or for ancillary services such as frequency regulation. Typical hardware includes lithium-ion or advanced-chemistry batteries, bidirectional inverters/PCS, and a battery-management system. Many tenders restrict charging to the on-site PV array, so developers size storage for arbitrage rather than firm delivery. CUF can rise to 20–25 %, but the battery adds substantial capital cost—around ₹1–1.3 crore/MWh installed—yielding tariffs of roughly ₹3.0–₹3.5/kWh once ISTS charges are included.

(c) Hybrid (Solar + Wind): Solar–wind hybrid projects combine co-located or regionally pooled solar PV and wind turbines, using a single connection point to the grid. By leveraging complementary generation profiles—solar in the day, wind at night and during monsoon months—these plants improve annual CUF to 35–45 % without batteries. Key technical components include wind turbine generators, PV arrays, pooling substation, and advanced forecasting/dispatch systems. Although hybrids reduce intermittency compared to standalone solar or wind, they still cannot guarantee firm hourly output and rely on natural resource complementarity. Capex is higher than plain solar but lower than solar-plus-storage, and discovered tariffs have typically been ₹2.9–₹3.3/kWh depending on site quality and ISTS charges.

(d) Round-the-Clock (RTC) Renewable: RTC projects compete directly with thermal baseload by committing to continuous 24×7 renewable supply with annual availability of 80–90 %. Developers build portfolios of geographically diverse solar and wind plants, often supplemented by off-site BESS, pumped storage, or firm low-carbon backup (biomass, green hydrogen, or hydro). Dispatch must meet 15-minute scheduling with deviation penalties under the Indian Electricity Grid Code, requiring advanced forecasting and real-time control. To maintain round-the-clock output, portfolios are significantly oversized, which inflates capex and reduces the blended CUF of individual assets. Discovered tariffs in RTC auctions typically range from ₹3.5–₹4.5/kWh.

(e) Firm & Dispatchable Renewable Energy (FDRE): FDRE represents India’s next-generation peaking solution; a single or multi-site renewable plant co-located with high-capacity BESS that must deliver firm, scheduled output during defined peak windows (morning and evening). CUF requirements usually sit at 30–40 %, demanding precise optimization of both PV and storage. Unlike simple hybrids, many FDRE tenders permit night-time grid charging, lowering solar oversizing and reducing battery degradation. The technical scope includes large PCS, advanced energy-management systems for dual-cycle operation, stringent round-trip efficiency targets (≥85 %), and peak-availability guarantees (~95 %). These features shift balancing responsibility from the DISCOM to the developer, enabling tariffs competitive with coal-based peaking plants.

Among today’s five dominant renewable formats—normal solar, solar + storage, hybrid (solar + wind), RTC renewable, and FDRE—DISCOMs increasingly favour FDRE because it delivers firm, scheduled, and dispatchable output during peak hours without requiring the utility to manage balancing reserves.

FDRE contracts commit to fixed megawatt delivery in defined peak windows (for example, 440 MW from 07:00–11:00 and 18:00–22:00). Large on-site Battery Energy Storage Systems (BESS) absorb excess daytime solar and discharge precisely when the grid hits maximum demand, ensuring grid-code-compliant, 15-minute scheduling. Unlike normal solar or simple solar-plus-storage, FDRE shifts all intermittency and ramp-rate risk to the developer. The BESS provides frequency regulation, spinning-reserve equivalence, and fast-ramping capability, so the DISCOM avoids paying for separate peaking plants or ancillary reserves. FDRE projects inside MNRE-notified solar parks benefit from pre-approved land, pooled transmission evacuation, and single-window clearances, reducing interface risk and accelerating capacity addition to meet Renewable Purchase Obligations (RPOs) and peak-demand targets.

While RTC renewable portfolios remain attractive for 24×7 baseload substitution, they require DISCOMs to offtake power around the clock at a higher blended tariff. Normal solar, hybrids, and simple solar-plus-storage continue to provide low-cost daytime energy but cannot alone meet evening-peak reliability requirements.

With integrated high-capacity storage, grid-charging flexibility, and robust payment security, FDRE is now the preferred procurement pathway for DISCOMs seeking low-cost, dispatchable renewable capacity to replace or complement coal during peak hours.

Even after commissioning of over 242 GW from RE segment. Over 40 GW of renewable capacity from completed solar and wind auctions in India remain stranded — winners have secured Letters of Award (LoAs), but Power Sale Agreements (PSAs) or PPAs are yet to be signed, delaying project financial closure and execution.   This backlog arises from DISCOMs’ reluctance to lock into long-term tariffs amid expectations of further declines, regulatory approval delays, transmission readiness shortfalls, and infrastructure risks.  In this climate, projects structured with firm output guarantees, storage, grid-charging flexibility, strong payment security, and aligned evacuation (as in FDRE, solar-plus-storage, or standalone storage tenders) are being viewed as higher-confidence investment options. They reduce demand risk for the offtaker, provide more assured revenue streams, and mitigate delays caused by uncertain tariff trajectories.

Morena: A Landmark in Dispatchable Renewables

Rewa Ultra Mega Solar Ltd. (RUMSL) is a state–central joint venture formed in 2015 by Madhya Pradesh Urja Vikas Nigam Limited (MPUVNL) and the Solar Energy Corporation of India (SECI). Recognized by the Ministry of New & Renewable Energy (MNRE) as a Solar Power Park Developer (SPPD) under the Government of India’s Solar Park Scheme, RUMSL has emerged as a national benchmark for large-scale, bankable renewable projects.

Building on its earlier successes, RUMSL launched one of India’s most competitive Firm and Dispatchable Renewable Energy (FDRE) tenders in September 2024, inviting bids for a 600 MW (AC) solar project integrated with an 880 MWh dual-cycle Battery Energy Storage System (BESS) at the Morena Solar Park, Madhya Pradesh where 440 MW firm power required in the peak hours. This landmark procurement set new standards for combining utility-scale solar generation with guaranteed peak-power delivery.

In a fiercely competitive reverse auction conducted in September 2025, ACME Solar Holdings secured 220 MW at a tariff of ₹2.76/kWh, while Ceigall India won an equal 220 MW capacity at a record-low ₹2.70/kWh. These tariffs set a new national benchmark for firm and dispatchable renewable energy, underscoring how well-structured payment security and clear technical provisions can drive prices below the variable cost of coal-based peaking power.

Scope & Design: The project comprises two independent units of up to 300 MW each, engineered to deliver 440 MWh of firm output twice daily—once in the morning peak and again in the evening peak—guaranteeing a dispatchable 440 MW during the defined supply windows. Each block integrates utility-scale PV with a high-capacity Battery Energy Storage System (BESS) sized for dual charge–discharge cycles and round-trip efficiency of at least 85 %, enabling seamless morning and evening delivery without oversizing the solar array.

Infrastructure & Support: Developed under the MNRE Solar Park Scheme, the project benefits from Central Financial Assistance of ₹20 lakh/MW for common infrastructure—graded land, internal roads, boundary walls, pooling substations, and dedicated 400 kV evacuation lines. RUMSL has secured roughly 1,200 hectares (≈575 ha for Unit 1 and ≈635 ha for Unit 2) and appointed MP TRANSCO as the single EPC contractor for transmission, eliminating multi-party interface risk and ensuring synchronized commissioning.

Commercial Safeguards: Robust Payment Security with the three-tier mechanism—Letter of Credit from MPPMCL, a Payment Security Fund covering up to 12 months of dues, and an explicit State Government guarantee—provides bankable revenue certainty.

Night-Time Grid Charging: Developers are entitled to free grid charging between 22:00 and 05:00, capped at 517.6 MWh per day. Usage beyond the cap attracts penalties, while lower usage is incentivized through an excess-energy settlement price, encouraging optimal battery cycling and grid services.

Performance Guarantees: Mandatory 95 % peak-hour availability and a minimum 35 % CUF ensure firm capacity. Any solar output above 220 MW and up to 300 MW earns an additional ₹2.15/kWh for incremental energy, rewarding superior plant performance.

These integrated technical, infrastructural, and commercial provisions allowed bidders to quote record-low tariffs of ₹2.70–₹2.76/kWh, proving that solar-plus-storage, when backed by clear policy signals and bankable contracts, can undercut the variable cost of coal-based peaking power and set a new benchmark for firm renewable procurement in India.

How Other FDRE Tenders Compare

The Morena auction stands out not only for its record tariff but also for the structural advantages that enabled it. A comparison with other recent firm and dispatchable renewable energy (FDRE) tenders highlights the key drivers of cost divergence.

Project & Procurer	Capacity (Solar / BESS)	Auction Date	Winners (MW)	Discovered Tariff (₹/kWh)	ESS Charging Source	Transmission Charges/Loss	Land & Evacuation
RUMSL Morena (MP)	600 MW AC + 880 MWh	Sept 2025	ACME 220, Ceigall 220	2.70 – 2.76	Solar Grid + Night-time free power from MPPMCL	Included in tariff; no extra ISTS	Provided by RUMSL under MNRE Solar Park (₹20 lakh/MW CFA) 35% CUF
Tata Power FDRE	250 MW (BESS size not disclosed)	Aug 2025	Juniper 70, Navayuga 50, ACEM 50, Tata RE 80	4.76 – 4.77	Only renewable (solar/wind/Other)	Add ₹0.11/kWh ISTS charges + ₹0.22/kWh losses	Developer-scope: land & full infra, 40% CUF
SJVN Solar plus storage (March 2025)	1,200 MW + 600 MW/2,400 MWh	July-2025	Reliance 390, PNC 300, SAEL 300, JBM 150, Navayuga 60	3.13	Likely RE-only (as per BOO guidelines)	ISTS cost borne by developer	BOO; full development by developer
SJVN Solar plus storage (Sept 2024)	1,200 MW + 600 MW/2,400 MWh	May 2025	Multiple	3.32 – 3.33	RE-only	Developer	Developer
NHPC Solar plus storage (Sept 2024)	1,200 MW + 600 MW/1,200 MWh	Jan 2025	Multiple	3.09 – 3.10	RE-only	Developer	Developer

Key Drivers of Tariff Spread

Charging Source Flexibility: Morena allows free night-time grid charging, dramatically reducing PV oversizing and battery cycling costs. By contrast, Tata and SJVN projects mandate renewable-only charging, forcing larger PV arrays and higher battery capacity, inflating levelized cost.

Infrastructure & Land: RUMSL provides fully developed solar park land and single-package evacuation under MNRE’s ₹20 lakh/MW central assistance, lowering both CAPEX and execution risk. Other tenders require developers to secure land and build evacuation, adding time and expense.

Payment Security & Financing: RUMSL’s three-tier mechanism—Letter of Credit, 12-month Payment Security Fund, and a state guarantee—cuts financing costs. Competing tenders offer weaker or conventional payment safeguards, prompting lenders to price in higher risk premiums.

Capacity Utilization Factor (CUF) Impact: Morena’s tender stipulates a minimum CUF of 35 %, whereas the Tata FDRE auction mandated a higher 40 % CUF. That 5-percentage-point increase drives significant cost escalation; developers must oversize both the photovoltaic array and the battery system to meet guaranteed annual output, leading to higher capex, more complex procurement, and elevated Levelized Cost of Energy (LCOE). The stricter CUF requirement therefore inflates project economics from design through financing, directly contributing to Tata’s ₹4.7/kWh tariff band versus Morena’s sub-₹2.8/kWh discovery.

These structural advantages translate into an almost ₹2/kWh tariff gap between Morena (₹2.70–2.76) and the Tata FDRE project (₹4.76–4.77), despite both using similar lithium-ion technology. The Morena experience demonstrates that carefully designed procurement—pre-secured land, robust three-tier payment security, and flexible grid-charging provisions—can unlock firm, dispatchable renewable power at prices competitive with, and in some cases lower than, coal-based peaking generation.

Key Takeaways

Policy Design Drives Bankability: Morena’s blend of MNRE solar-park support, grid-charging flexibility, and state-backed payment security proves that the right commercial framework can consistently deliver tariffs at or below conventional thermal power.

Margin Protection Through Risk Mitigation: Low tariffs don’t automatically mean low returns. By reducing development risk and lowering the cost of capital, Morena enables attractive internal rates of return—especially when paired with disciplined EPC execution and robust, long-term battery warranties.

Replicable Blueprint: The Morena model—MNRE park backing, free grid charging, and a three-tier payment-security mechanism—now stands as a ready-to-scale template for other state agencies aiming to deploy affordable firm renewables.

Strategic Guidance:

Prioritize Flexible Charging: Select projects that allow both renewable and grid charging. This lowers upfront capex, optimizes asset utilization, and reduces battery degradation risk—key to maintaining high round-trip efficiency.

Secure Long-Term Battery Warranties: With 95 % peak-availability targets now common, insist on multi-cycle warranties and explicit round-trip efficiency guarantees to safeguard operating margins over a 15–20-year life.

Lock in Competitive Financing Early: Competition for firm renewable assets is accelerating. Hedge interest rates or arrange fixed-rate financing to protect returns against tightening credit and rising debt costs.

Look Beyond Tariff Headlines: A ₹2.7/kWh PPA backed by MNRE park benefits, free grid-charging rights, and a three-tier payment-security mechanism can deliver stronger risk-adjusted returns than a ₹4.7/kWh contract burdened by regulatory or infrastructure uncertainty.

Evaluate Ancillary Revenue Streams: Assess opportunities such as frequency regulation, peak-shaving services, or capacity payments, which can enhance cash flows and buffer market-price volatility.

The Morena FDRE auction proves that well-structured policy support—MNRE park incentives, flexible charging, and robust payment security—can make dispatchable renewables both bankable and cost-competitive with coal peakers. Investors who secure flexible assets, long-term warranties, and stable financing early will be best positioned to capture superior risk-adjusted returns as India scales firm renewable energy.

The Bigger Picture

India’s Firm & Dispatchable Renewable Energy (FDRE) market has moved beyond pilot stage. With the Morena auction clearing below ₹2.8/kWh, solar-plus-storage has decisively undercut the cost of new coal-based peaking power, proving that clean, on-demand capacity is no longer a premium product but an economic baseline.

The next phase hinges on scalable replication of the RUMSL playbook across states:

· Pre-secured land and integrated evacuation corridors to eliminate right-of-way delays and cut balance-of-plant costs.

· Flexible grid-charging provisions that allow off-peak or surplus thermal/hydro energy to top up batteries, reducing oversizing and lowering LCOE.

· Bank-grade, multi-tier payment security mechanisms to compress the cost of capital.

· Standardized technical benchmarks—95 % peak-availability targets, minimum 85 % round-trip efficiency, and cell chemistry certified for ≥6,000 full cycles—to assure long-life performance and investor confidence.

For institutional investors and sovereign funds, the signal is unmistakable: firm renewables are now core infrastructure assets, offering utility-scale capacity with stable cash flows, investment-grade credit profiles, and embedded ESG alignment.

Looking ahead, FDRE projects can unlock additional revenue through ancillary services, frequency regulation, and capacity-market participation, enhancing returns beyond the PPA floor. As India advances toward its 500 GW non-fossil target by 2030, dispatchable solar-storage will anchor the evening peak and balance a high-renewables grid, positioning early movers to capture both climate leadership and superior risk-adjusted yields.

Acknowledgement:

This article is based on the authors’ independent analysis, supplemented by publicly available tender documents, regulatory guidelines, and market reports from MNRE, RUMSL, SECI, CEA, CERC, BloombergNEF, IEA, and the Press Information Bureau to ensure accuracy of technical, financial, and policy data presented.

Citation

Devanshu Devang, Radhey Shyam, Vivek Sharma, D. P. Kothari, and Chhagan Lal. “India’s Firm Renewable Energy Auctions: A New Benchmark for Solar-Plus-Storage.” Renewable Energy Chronicles: The Power Saga, Renewable Energy Society of India, 2025.