Microgrids are a beneficial alternative to the conventional generation system that can provide greener, reliable and high quality power with reduced losses, and lower network congestion. However, the performance of renewable energy resource (RER) based generators in a microgrid is hindered by their intermittent nature. The energy storage system plays a key role in overcoming the intermittency of renewable sources by balancing the power demand against variable generation. Energy storage using batteries is accepted as one of the most important and efficient ways for retaining reliable energy supply whilst incorporating RERs into the electricity grid. Lead-acid (LA) batteries have been the most commonly used electrochemical energy storage technology for grid based applications till date, but many other competing technologies are also being used such as lithium-ion (Li ion), Sodium-Sulphur and flow batteries. This paper carries out the techno-economic analysis of the battery storage system under different configurations of the microgrid system. The design of an optimal model of standalone as well as grid-connected microgrid systems having PV-wind-diesel and biodiesel energy resources in the presence of Li-ion (LiFeSO4 type) and LA batteries have been studied. The performance of the two types of batteries has been compared in the proposed microgrid systems considering realistic load profiles, real resource data, and real prices of the components. Load profiles of two rural villages, a business organization and an urban residential building have been used. On the basis of these load profiles and available resources, different microgrid configurations with generation from PV, wind turbine, diesel and biodiesel generators have been considered to study the performances of the batteries. The results include the cost of optimal system configuration under the given scenarios, electricity generation by various generating sources, detail comparison between various components, emissions, and various batteries performance assessment parameters. The study reveals that Li-ion batteries as energy storage are techno-economically more viable compared to LA batteries and they are expected to play a significant role in various applications of future electric power systems.