Battery-as-a-Service: why owning your batteries is the expensive option.
Most organisations buy batteries as capital equipment and then discover they behave like a recurring operating cost. That mismatch is what BaaS exists to fix — and understanding why it happens is more useful than any vendor pitch.
Published 2 August 2026 · ReStore Life · 8 min read
- The short version
- Energy is roughly 30% of telecom operating costs in urban areas and 50% in rural, per the Telecommunication Engineering Centre.
- Bulk diesel rose ₹22 per litre in March 2026, taking Delhi rates past ₹109.
- EY estimates a 10% diesel rise costs Indian telcos ₹600–700 crore in power and fuel.
- BaaS moves batteries off the balance sheet and moves failure risk to the provider.
- It is not always right. If your capital is already spent, an AMC usually beats it.
The problem with treating batteries as an asset
A battery gets bought like equipment. It goes on the balance sheet, it depreciates on a schedule, and the finance team treats it as a one-time capital event.
Then it fails earlier than the depreciation schedule assumed, gets replaced out of whatever budget is nearest, and the cycle repeats. Across a large estate this happens continuously and unevenly, so it never appears as a single reviewable line item. It appears as noise.
The honest description is that batteries are a consumable priced as an asset. Every organisation running backup power at scale already pays a recurring battery cost. Most simply do not see it as one, because it is spread across sites, budgets and quarters.
What backup power actually costs in India right now
Telecom is the clearest example because the numbers are public and the scale removes any ambiguity. India has over 600,000 mobile towers, each drawing roughly 1–3 kW, and many sit in areas where grid supply is unreliable.
According to the Telecommunication Engineering Centre, energy accounts for nearly 30% of telecom operating costs in urban areas and close to 50% in rural areas. EY puts power and fuel at 30–40% of total network costs. The Digital Infrastructure Providers Association reports outages of four to six hours daily in several states, which is what keeps diesel generators running.
And diesel is not getting cheaper. Bulk diesel sold to industrial users rose ₹22 per litre in March 2026, taking the Delhi rate past ₹109. EY estimated that a 10% increase adds ₹600–700 crore to telecom power and fuel costs. Airtel has since stated publicly that eliminating diesel from its operations is a major focus, working with Indus Towers to shift to high-powered batteries and alternative sources.
The strategic direction is clear across the sector: less diesel, more battery. Which makes the battery estate more load-bearing, not less — and makes how you finance and maintain it a larger question than it was five years ago.
How Battery-as-a-Service changes the arrangement
Under BaaS, you do not buy the batteries. The provider supplies, monitors, maintains and replaces them, and you pay a recurring fee for the outcome — dependable stored energy — rather than for the hardware.
Three things change as a result, and only two of them are financial.
Capital returns
Money that was locked into backup infrastructure becomes available for the core business. For a growing operation this is usually the largest single effect.
Costs become predictable
A known monthly figure replaces an unpredictable replacement cycle. Under Ind AS 116, depreciation on leased assets can be claimed, adding a tax effect to the cash-flow one.
Incentives invert
This is the one people miss. A hardware vendor earns when a battery is replaced. A subscription provider earns when it is not.
That third point deserves more weight than it usually gets. When the provider owns the asset, every early failure is their cost. It becomes commercially rational for them to monitor state of health continuously, intervene before failure, and restore rather than replace wherever the battery allows it. Under a purchase model, none of those incentives point the same way.
BaaS, AMC or outright purchase
These three get confused constantly, including by people selling them. The difference is not what happens to the batteries — it is who owns them and who carries the risk.
| Purchase | AMC | BaaS | |
|---|---|---|---|
| Who owns the batteries | You | You | Provider |
| Upfront cost | Full capital | Already sunk | None |
| Who carries failure risk | You | Shared | Provider |
| Scaling capacity | New purchase | New purchase | Adjust subscription |
| Choose it when | Storage is strategic and capital is cheap | The capital is already spent | You want that capital back |
If you already own a large estate, BaaS is usually the wrong first move — the capital is spent and switching does not recover it. An AMC or a leased management system extracts more value from what you have. BaaS earns its place at the point of the next major replacement decision.
Where BaaS is a poor fit
Any model presented as universally correct should be treated with suspicion. BaaS is not right in at least three situations.
- Your estate is new. If you bought recently, the capital is committed and the batteries have years of life. Maintain them properly instead.
- Storage is your competitive advantage. If how you store energy is core strategy rather than infrastructure, owning and controlling it may be worth the capital.
- The site is very small. Subscription models carry administrative overhead. Below a certain scale that overhead outweighs the benefit.
The useful question is not "is BaaS better" but "where is my capital most productive, and who is best placed to carry battery failure risk". For a telecom operator, a hospital or a manufacturer, the answer is rarely that they should be in the battery ownership business.
Four questions to ask any BaaS provider
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1. What exactly triggers a replacement?
A capacity threshold stated as a number is a commitment. "As required" is not. Ask what state of health prompts intervention and how it is measured.
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2. Where do retired batteries go?
Under India's Battery Waste Management Rules 2022, this is a compliance question with your name attached. Ask for the licensed recycler and the provider's CPCB registration.
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3. What happens at the end of the term?
Who removes the hardware, at whose cost, and what does a transition to another provider look like? Exit terms are easier to negotiate before signing than after.
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4. Can I see the monitoring data?
If performance is what you are buying, you should be able to see it. Access to state-of-health telemetry separates a service from a rental.
The wider context
BaaS is not only a financing structure. In a country where grid-scale storage remains far behind plan — roughly 0.5 GWh operational against a 236 GWh target for 2031-32 — distributed batteries carry more of the reliability burden than headline renewable figures suggest. We have written separately about why storage, not solar, is now India's bottleneck.
In that context, a commercial model that rewards keeping batteries alive rather than selling replacements is not just cheaper for the customer. It is the arrangement that puts the least strain on a supply chain and a materials loop already under pressure.
- FAQs
Frequently asked questions.
What is Battery-as-a-Service?
Battery-as-a-Service (BaaS) is a subscription model for energy storage. Rather than buying batteries, an organisation pays a recurring fee and the provider supplies, monitors, maintains and replaces the units. Ownership and performance risk sit with the provider; the customer pays for uptime rather than hardware.
How is BaaS different from an AMC?
An AMC is a service contract covering maintenance of batteries you already own, and the asset stays on your balance sheet. Under BaaS you do not own the batteries at all. The difference is financial as much as operational: AMC services owned assets, BaaS converts the asset itself into an operating expense.
What are the accounting benefits of BaaS in India?
Under Indian Accounting Standard 116, customers can claim depreciation on leased assets, giving a tax benefit alongside the cash-flow advantage of moving from capital to operating expenditure. Treatment depends on how a specific contract is structured, so finance teams should confirm with their auditors.
Is BaaS cheaper than buying batteries?
Not always cheaper in absolute terms over a long horizon, but it changes what you are paying for and who carries the risk. The saving comes from removing upfront capital, avoiding replacement cycles you did not budget for, and shifting failure risk to the provider. For organisations where capital has better uses elsewhere, that trade is usually favourable.
Who is BaaS suitable for?
Bulk battery users where storage is business-critical and replacement ties up meaningful capital — telecom tower operators, data centres, large solar installations, hospitals, industrial sites and fleet operators. It suits organisations that would rather deploy capital into their core business than into backup infrastructure.
What happens if a battery fails under BaaS?
The provider replaces it. That is the structural point of the model: the failure is the provider's cost, not an unbudgeted expense for the customer. It also means the provider has a direct financial incentive to keep batteries healthy rather than to sell replacements.
Does BaaS work with existing batteries?
Not directly — BaaS supplies new or restored batteries under the provider's ownership. If you have an existing estate you want managed rather than replaced, an annual maintenance contract or a leased battery management system is the closer fit.