Ask three suppliers what their battery costs and you will get three numbers in three different units: ₹ per kWh of capacity, ₹ lakh per MW per month, and ₹ per unit delivered. None of them can be compared with the others directly.
The levelised cost of storage (LCOS) is the tool that puts them on the same footing. It answers one question: across the whole life of this battery, what does each unit it delivers actually cost me?
The formula in plain English
LCOS is a fraction.
- On top: everything you will spend on the battery over its life — the upfront capital, yearly operation and maintenance, any capacity you add later to offset ageing, insurance, financing, and the cost of decommissioning at the end.
- Underneath: every kWh the battery will actually deliver back to you over that same life.
Both are discounted — money and energy in year 12 are counted as worth less than money and energy today, using your cost of capital. That is what “levelised” means: a single, constant ₹ per kWh figure that recovers every cost over the life of the asset.
Why the bottom half of the fraction decides everything
Most buyers focus on the capital cost. But the denominator — how much energy the battery actually delivers — moves LCOS just as hard, and it is driven by things that are easy to overlook:
- Cycles per day. The same capital spread over two cycles a day instead of one roughly halves the capital portion of LCOS. This is the biggest single lever.
- Round-trip efficiency. Of every 100 kWh you put in, you get back something like 85–90 kWh on an AC-to-AC basis. The rest is lost as heat, and some of it is consumed keeping the battery cool. We cover this in round-trip efficiency and degradation.
- Degradation. Usable capacity falls every year. Either you accept delivering less energy, or you pay for augmentation to top it back up — which then sits in the numerator instead.
- Availability. Days the system is down for faults or maintenance deliver nothing but still carry their share of the cost.
What the published numbers say
Two widely cited 2025 benchmarks show how much assumptions matter.
Lazard’s 2025 analysis put the unsubsidised LCOS of a 100 MW standalone utility battery at US$129–277 per MWh for 2 hours and US$115–254 per MWh for 4 hours. A 1 MW, 2-hour commercial and industrial (C&I) system came in far higher, at US$319–506 per MWh — smaller systems carry more fixed engineering, grid-connection and installation cost for every kWh.
Ember, working from recent auction results, estimated that an all-in capex of about US$125 per kWh outside China and the US translates to an LCOS of roughly US$65 per MWh. Its assumptions were a 20-year life, one cycle a day, 90 per cent round-trip efficiency, a 7 per cent discount rate and 2 per cent annual degradation.
The gap between those numbers is not a disagreement about batteries. It is a difference in financing cost, cycling, and what is counted. That is precisely why you should never accept a single LCOS figure without its assumptions.
Turning an Indian capacity tariff into an LCOS-style number
Indian standalone storage is mostly bought as capacity, paid in ₹ lakh per MW per month — the structure explained in tolling agreements and capacity contracts. You can still convert that into a rough cost per unit delivered.
Take one real example. HG Infra’s 300 MW / 600 MWh project from GUVNL’s Phase VI auction in Gujarat was reported at a tariff of about ₹2,85,600 per MW per month. That is a 2-hour battery.
| Assumption | Energy delivered per MW per year | Capacity cost per kWh delivered |
|---|---|---|
| One full cycle a day | 2 MWh × 365 = 730 MWh | about ₹4.7 |
| Two full cycles a day | 2 MWh × 730 = 1,460 MWh | about ₹2.3 |
That is our own arithmetic on the reported tariff (₹2,85,600 × 12 ÷ energy delivered), and it deliberately leaves out the cost of the charging energy and efficiency losses, which the offtaker pays separately. It shows in one line why procurers push for more cycles: the monthly payment is fixed, so every extra cycle makes each unit cheaper.
How to calculate it for your own project
- Total the capital. Battery, power conversion system, balance of system, civil works, grid connection, taxes. Our BESS price guide covers current Indian ranges.
- Project the yearly costs. O&M, insurance, auxiliary power, planned augmentation, and a decommissioning allowance at the end.
- Estimate the energy delivered each year. Usable capacity × cycles × round-trip efficiency × availability, reduced each year by your degradation curve.
- Discount both streams at your weighted cost of capital.
- Divide discounted cost by discounted energy.
- For behind-the-meter use, add charging energy. Divide your charging tariff by round-trip efficiency and add it, or you will understate what a discharged unit really costs.
What this means for you
- If you are a C&I buyer, LCOS only tells you half the story. Compare it with the value of each discharged kWh — the peak tariff you avoid, the demand charge you cut, the diesel you do not burn. A battery with a higher LCOS can still pay back quickly if the spread is wide and it cycles every day.
- If you are a developer, model LCOS at several cycling assumptions, not one. A tender that allows two cycles a day and one that allows one are very different businesses, even at the same capacity tariff. Our standalone storage team can help size and model it.
- If you are comparing quotes, insist every supplier states the assumptions behind their number: life, cycles, efficiency, degradation, discount rate, and whether charging energy is included.
To see what a battery would save on your own tariff and load, try the BESS savings calculator.