India’s Ambitious Energy Storage Journey: Meeting COP26 Goals and Beyond

India’s Energy Storage Story
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By Debmalya Sen, President, India Energy Storage Alliance
June 10, 2025

India has made significant strides in promoting and deploying energy storage capacity, an essential component for achieving its ambitious energy goals. At COP26 in Glasgow, India committed to reducing the emissions intensity of its GDP by 45% by 2030 compared to 2005 levels. The country also aims to achieve approximately 50% of its cumulative electric power installed capacity from non-fossil fuel sources by 2030, supported by technology transfer and low-cost international financing, including the Green Climate Fund.

As of May 2025, India’s power capacity comprises 50% thermal (coal and gas), 47.3% renewable energy (including wind, solar, hydro, and biomass), and 2% nuclear. However, when looking at electricity generation, the figures shift to 75% coal, 13% from wind and solar, and 8% from hydro. With an installed capacity of 108 GW of solar, 51 GW of wind, and 48 GW of hydro, renewable sources account for only 22% of India’s electricity supply.

The Central Electricity Authority projects that to meet its COP26 targets, India will need 292 GW of solar, 100 GW of wind, along with 41.7 GW/228.5 GWh of battery storage capacity and an additional 18 GW of pumped hydro capacity, which should provide 6-8 hours of storage. Achieving these targets would result in renewable energy contributing 44% to total generation, while fossil fuels would account for 56%. To realize this vision, India will require a total investment of $55 billion in energy storage systems (ESS), which currently includes an installed base of only 500 MWh of Battery Energy Storage Systems (BESS) and 4.8 GW of pumped storage.

### Government Initiatives and Support

Recognizing the urgent need for enhanced energy storage, India has introduced several policies and regulatory frameworks to facilitate this transition. Among these initiatives is the **Energy Storage Obligation (ESO)**, which aims to boost renewable energy deployment by improving grid stability and managing the variability of solar and wind power. The ESO’s targets will rise from 1% in the financial year (FY) 2023-24 to 4% by FY 2029-30, with annual increments of 0.5%.

Additionally, a mandate has been implemented requiring that all new solar installations be coupled with at least 10% energy storage capacity (for a duration of 2 hours). The government has also established a **Viability Gap Funding (VGF)** scheme to financially support standalone BESS projects totaling 13.5 GWh, with the government covering 30% of the project capital expenditure (CAPEX).

In a recent announcement, the Ministry of Power introduced a second phase of VGF support for an additional 30 GWh of projects, providing 16% financial assistance on CAPEX. This support extends to 15 states and major power producer NTPC, enabling better integration of BESS with existing thermal plants.

India has also established standard bidding guidelines for ESS projects and developed a policy framework for pumped storage projects. To further boost domestic manufacturing, the government launched a **Production Linked Incentive (PLI)** scheme worth $2.1 billion to support the local production of 50 GWh of Advanced Cell Chemistry (ACC) batteries, contingent upon demonstrating 65% value creation within India.

### Transforming the ESS Market through Tenders

The growth of energy storage systems in India is largely driven by tenders issued by central and state government agencies. Central nodal agencies like SECI, NTPC, NHPC, and SJVN act as intermediaries, mitigating risks in the power procurement process. Various states, including Gujarat, Rajasthan, Maharashtra, and Tamil Nadu, have also initiated their own ESS tenders.

The tenders fall into three main categories:

1. **Standalone BESS/Pumped Storage Tenders**: These require developers to build, own, and operate BESS or pumped storage projects for a specified duration. The tenders generally stipulate a two-cycle operation for BESS over 2 hours, with degradation limits, while pumped storage projects require a continuous discharge duration of 5 hours.

2. **Firm and Dispatchable Renewable Energy (FDRE) Tenders**: These tenders combine solar, wind, and energy storage and aim to ensure reliable energy delivery. They include various models, such as the Assured Peak model and Load-Following Model, each with specific requirements for energy dispatch and availability.

3. **Solar Coupled with BESS Tenders**: These involve a 25-year power purchase agreement (PPA) with a requirement for energy storage dispatch for 2 to 4 hours. This category has seen significant interest and success, with competitive tariff rates.

Over 160 GWh of ESS-linked tenders have been issued in India, with 54 GWh of BESS and 106 GWh of pumped storage tenders. Currently, approximately 57 GWh are in various stages of execution, while 53 GWh are still undergoing the tendering process.

### Manufacturing Challenges and Future Outlook

Despite progress, India’s battery manufacturing sector has faced delays, with the PLI scheme supporting 40 GWh awarded to companies like Reliance and OLA. By 2030, India aims to achieve over 140 GWh of battery manufacturing capacity, driven by increasing demand from electric vehicles (EVs) and energy storage systems, projected to reach around 2 TWh by 2031-32.

Efforts are underway to enhance domestic production capabilities, including the introduction of an Approved List of Battery Manufacturers and increased customs duties on imports.

India is taking significant steps to accelerate demand for energy storage while securing its supply chain to meet its COP26 commitments. While there is room for improvement, the country is on track to become the third-largest battery market by 2030, as projected by the International Energy Agency (IEA).

### Conclusion

At the upcoming 11th India Energy Storage Week (IESW) from July 8-10 in Delhi, stakeholders will gather to celebrate India’s achievements in energy storage and discuss strategies to meet this growing demand.

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**About the Author**
Debmalya Sen is the President of the India Energy Storage Alliance (IESA), leading a coalition of over 180 members in accelerating energy storage deployment. He collaborates closely with both government and private sectors to provide pivotal recommendations in the field of energy storage. Previously, he served as the India Lead for the World Economic Forum and worked as a management consultant at KPMG, focusing on energy storage and renewable energy initiatives.