BESS price surge, a setback for RE investment
The 30 per cent surge in prices for Solar PV and Battery Energy Storage Systems (BESS) over the last three months has rendered such investments financially unviable in the current climate, according to industry analysts.
The removal of a 9 per cent VAT rebate on solar exports, along with surging silver prices (a critical component), has forced manufacturers to raise prices, reversing the previous “cheap era” of solar and batteries. Analysts said that in the residential sector, these price changes frequently squeeze installer margins rather than causing a massive drop in demand, but they do make projects less financially attractive compared to 2025 levels.
Even before these hikes, BESS was primarily feasible for larger installations, as duty-exempt bonded warehouse facilities were restricted to systems exceeding 1MWh). “To achieve 1MWh of energy, approximately 250kW of solar capacity is required. The solar components alone now exceed Rs. 25 million, while a 1MWh BESS—previously priced above US $100,000 FOB—has climbed further due to rising commodity costs for lithium, copper, and silver,” explained Shehan Talagala, Sales Director at Jinko Solar, speaking to Sunday Times Business.
Mr. Talagala foresees limited immediate demand, noting a significant disconnect between global trends and the local market. However, he believes it is only a matter of time before the country reaches an inflexion point. At this stage, static or rising grid tariffs, coupled with expected future price corrections in PV+BESS technology, will drive consumers to reduce their reliance on the grid—a shift already observed in markets like Pakistan.
While many nations are fast-tracking the renewable transition to leverage cost advantages, Mr. Talagala warned that the inertia shown by local authorities in embracing this paradigm shift will remain a significant drag on the country’s growth prospects.
Another solar company official noted that the current fuel issue may present some opportunity for BESS for residential customers.
He said that generally, customers are interested in the BESS but have other concerns such as the cost structure. He added that the company has already completed some six to seven projects, both residential and commercial. But currently inquiry for residential systems is slow, he said. A prolonged fuel supply issue will popularise residential BESS.
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