Decode : Chapter 3 – India’s Energy Storage Journey

We at Cleantech Hero are excited to invite valuable insights from Debmalya Sen, President – India Energy Storage Alliance (IESA), on the current energy storage landscape of India; summarising key developments in policy, investment, tendering, and technology.

India stands on the cusp of a transformative energy revolution, driven by an ambitious and necessary push towards large-scale energy storage systems. As the country ramps up its renewable energy capacities, the challenge of intermittency—sunlight and wind availability—has brought battery energy storage systems (BESS) and pumped hydro into sharp focus.

The Demand Landscape

India’s energy storage demand projections are staggering. By 2031–32, the Indian grid is expected to require:

• 47 GW of battery storage with 5-hour duration, equating to 236 GWh of storage capacity.
• 26 GW of pumped hydro storage, each with a 6-hour capacity.

This totals an estimated investment of ₹4.79 lakh crore ($58 billion) between 2022 and 2032. When factoring in electric vehicles (EVs), the total battery demand could reach 2 TWh by 2032, signalling an unprecedented growth trajectory.

Policy and Regulatory Enablers

Recognising the enormity of the task, the Indian government has launched a suite of demand-side and supply-side policy enablers:

Demand-Side Measures

1. Energy Storage Obligation (ESO): A mandate requiring 4% of total energy consumption to be met via storage by 2030.

2. National Energy Storage Framework: A comprehensive policy vision to streamline storage development.

3. Advisory on Solar + Storage: Recommends solar projects to include 10% or two hours of storage

4. Waivers and Incentives:

• Waivers on Inter-State Transmission System (ISTS) charges.
• Viability Gap Funding (VGF): Initially covering 4 GWh of storage, later scaled up to 13.5 GWh with government bearing up to 30% of project costs.
• 12.1 GWh of this target has already been tendered.

Supply-Side Measures

1. Production-Linked Incentive (PLI): A ₹18,100 crore scheme to promote 50 GWh of advanced chemistry cell (ACC) battery manufacturing.

2. Critical Mineral Strategy: Identifying and securing raw materials through global partnerships and a dedicated mineral mission.

3. Battery Recycling Policy: Under design to promote the circular economy in the energy sector.

4. State-Level Incentives: Several states are offering manufacturing incentives to attract investments in battery plants.

Market Participation and Grid Planning

BESS is now permitted to participate in India’s ancillary services market, specifically secondary and tertiary services, although primary frequency regulation remains excluded.

Grid India has outlined a short-term resource adequacy plan, highlighting the need for:

• 17 GW of battery storage, and
• 16 GW of pumped hydro, by 2025–26, emphasising the importance of timely project execution.

Tendering and Deployment Progress

India has witnessed a sharp acceleration in storage-related tenders:

• 110 tenders issued as of June 4, 2025.
• 158 GWh of tendered capacity, including – 53 GWh of battery storage and 106 GWh of pumped hydro.

Of the above, 46 GWh is currently under construction; however, timely implementation remains critical. Delays in awarding and buyer identification have created an average 8–9 month gap before the project commencement. With only 400 MWh of operational capacity today, India needs to add 40–50 GWh annually to meet its 2030 targets.

Evolving Business and Tender Models

India’s tender landscape has diversified into several categories:

1. Standalone Storage Tenders

• Most popular model.
• The government provides land, charging power, and 12-year power purchase agreements (PPAs).
• Supported by VGF.
• 37 tenders totalling 32.5 GWh issued to date.

2. Solar + Storage

• Originally targeted for remote locations (e.g., Lakshadweep, Andaman).
• Now scaled up through SECI (Solar Energy Corporation of India) with price discovery mechanisms.
• As of now, 15 GWh of battery storage paired with 11.94 GW of solar has been tendered.

3. Firm and Dispatchable Renewable Energy (FDRE). Includes four types:

• Assured Peak: 90% availability for 4 hours daily.
• Load Following: Matches load profile hour-to-hour.
• Round-the-Clock (RTC): 85% availability throughout the day.
• Peak Supply: Solar is used solely to charge batteries, with a 4-hour evening discharge.

Among these, Assured Peak has emerged as the most cost-effective and popular, followed by RTC and Load Following.

Price Discovery and Trends

India’s tenders have seen rapid price corrections:

• Standalone Storage: ₹2.21–2.8 lakh/MW/month

• Solar + Storage: ₹3.09/kWh for 2-hour storage and ₹3.34/kWh for 4-hour storage

• FDRE Assured Peak: ₹4.25–4.72/kWh

• FDRE Load Following: ₹4.98–5.59/kWh

• Peak Supply: Up to ₹8.5/kWh

The sharp fall in storage prices—by 66% in standalone BESS tenders—has been driven by the VGF scheme and global battery cost reductions.

Key Players and Competitive Landscape

• Established renewable giants dominate FDRE and solar + storage tenders.
• Standalone tenders have attracted new entrants, offering an easier entry point into the sector due to simplified risk structures and government support.

Challenges and Bottlenecks

Despite strong momentum, several challenges remain:

• Award-to-construction delays: Projects take 18+ months to complete, and delays in securing buyers can stall progress.
• Low under-construction ratio: Especially in FDRE tenders.
• Tender Cancellations: Significant numbers in 2022–23.
• High dependency on imports: Especially for raw materials and battery components.

India must rapidly scale its implementation efficiency to avoid falling behind its 2030 targets

The Road Ahead

With just 400 MWh of capacity installed today and a target of 236 GWh by 2032, India’s energy storage sector must scale like never before. Encouragingly, 2024 and 2025 have already outpaced previous years in tender volumes, with policy frameworks now firmly in place.

The challenge now is execution—ensuring timely construction, resolving financial bottlenecks, and securing supply chains. If successful, India could become not just a leader in renewable energy deployment, but a global hub for energy storage innovation and manufacturing.

Also read: Decode : Chapter 1 – Understanding BESS and its Applications