India's Race to Scale Battery Energy Storage

Battery Energy Storage Systems (BESS) are emerging as a key enabler of renewable energy integration and grid reliability in India. Driven by declining battery costs, expanding renewable capacity, and supportive government policies, the sector is experiencing rapid growth. This article explores India’s BESS market growth, storage requirements, policy landscape, opportunities, and challenges.

Market Growth

India’s BESS market is witnessing one of the fastest growth trajectories within the infrastructure sector. From a relatively small market in 2021, it has expanded significantly and is projected to exceed INR 500 thousand crore in revenue by 2032. Installed storage capacity is expected to increase from under 18.5 MWh (CY21) to over 459.0 GWh (CY25), reflecting rapid deployment.

Storage Requirement

By 2030, a total of 61 GW/218 GWh of energy storage is projected to be cost-effective to support 500 GW of clean power capacity. This requirement is expected to increase to 97 GW/362 GWh by 2032. Due to the significant reduction in battery costs, battery storage is anticipated to dominate the overall energy storage mix, accounting for 51 GW/164 GWh of the total storage requirement by 2030, comprising 20 GW of 2-hour batteries and 31 GW of 4-hour batteries. By 2032, battery storage is projected to account for 87 GW/308 GWh of the total 97 GW/362 GWh storage requirement, including 67 GW of 4-hour batteries and 20 GW of 2-hour batteries. The remaining storage requirement is expected to be met by pumped hydro and other storage technologies.

Policies

1. Viability Gap Funding (VGF): The Government of India has allocated ₹91 billion (US$1.09 billion) under the VGF scheme to support 43.2 GWh of BESS capacity. Standalone projects are eligible for grants covering up to 40% of capital costs, reducing investment risks and improving commercial viability. 

2. Production Linked Incentive (PLI) for Advanced Chemistry Cells: The ₹181 billion (US$2.18 billion) PLI scheme aims to establish 50 GWh of domestic Advanced Chemistry Cell (ACC) manufacturing, reducing dependence on imported battery cells. India plans to develop over 200 GWh of battery manufacturing capacity by 2030. 

3. Energy Storage Obligations (ESO): The Ministry of Power has mandated DISCOMs to progressively procure storage-backed electricity, increasing from 1% in FY2024–25 to 4% by FY2029–30 (approximately 200–250 GWh). Rajasthan has already advanced this target to 3% by FY2026–27. 

4. Transmission Charge Waivers: BESS projects co-located with renewable energy plants and commissioned on or before June 2028 are exempt from interstate transmission charges, reducing project costs and encouraging hybrid renewable-storage projects. 

5. 2026 Union Budget Incentives: The 2026 Union Budget introduced customs duty exemptions on key lithium-ion BESS manufacturing inputs to strengthen domestic supply chains, reduce manufacturing costs, and accelerate local battery production. 

Opportunities

Hybrid renewable energy (BESS integrated) projects can strengthen the carbon economy by generating carbon credits under eligible project frameworks. Such projects are recognized under Japan’s Joint Crediting Mechanism (JCM) and are also eligible under the offset mechanism of India’s Carbon Market (ICM) through the approved renewable energy methodology, subject to specified eligibility criteria. 

Challenges

Despite strong market growth, India’s BESS sector faces several challenges. Aggressive underbidding in auctions has raised concerns over project viability, while delays in Power Purchase Agreement (PPA) execution have slowed implementation. Renewable energy deployment is outpacing transmission infrastructure, leading to grid congestion and reduced revenue certainty for co-located BESS projects. Continued reliance on imported battery cells exposes the sector to supply chain disruptions and price volatility, while high financing costs limit large-scale deployment.

Conclusion

Battery Energy Storage Systems (BESS) are strengthening India’s energy transition through improved renewable energy integration and grid reliability. With supportive policies and declining costs, deployment is accelerating. BESS will play a vital role in building a resilient and sustainable power system. 

References:

1. https://beeindia.gov.in/WriteReadData/RTF1984/RTF-PDF-7142dfb1cb5c2361_1776061176.pdf   

2. https://www.adanigreenenergy.com/newsroom/media-releases/adani-green-energy-commissions-the-worlds-largest-single-location-battery-energy-storage  

3. https://www.dcntglobal.com/indias-bess-boom-why-2026-is-a-watershed-year-for-energy-storage/

4. https://iecc.gspp.berkeley.edu/resources/reports/strategic-pathways-for-energy-storage-in-india-through-2032/ 

5. https://jakson-green.com/blogs/battery-energy-storage-systems-bess-in-india-market-growth-integration-challenges/  

6. https://www.kenresearch.com/articles/india-bess-market-storage-revolution 

7. https://www.shankariasparliament.com/current-affairs/prelim-bits-6/prelim-bits-5/joint-crediting-mechanism-jcm