India's Battery Storage Capacity to Hit 50 GWh in Two Years
India's battery energy storage system capacity is set to surge to 45-50 GWh over the next two fiscal years, driven by renewable energy needs.
India is on the verge of a massive expansion in its energy infrastructure, with the battery energy storage system (BESS) capacity expected to skyrocket. According to a recent report by Crisil Ratings, the country is poised to commission between 45-50 GWh of storage capacity over the current and upcoming fiscal years. This represents a monumental leap from the approximately 1 GWh installed as of the last fiscal year.
The Driving Force: Renewable Energy Integration
The urgent need for large-scale battery storage is inextricably linked to India's transition toward green energy. As renewable sources become a larger part of the national power mix, the challenge of intermittency grows. In FY26, renewable energy accounted for roughly 39 per cent of the country's installed power capacity and 15 per cent of total electricity generation.
Because solar power generation drops significantly during the evening—exactly when electricity demand typically peaks—BESS technology is essential. These systems act as a buffer, capturing surplus electricity during daylight hours and discharging it to maintain grid stability when the sun goes down.
Shifting Auction Trends
The scale of government involvement is becoming increasingly evident. The report highlights a dramatic shift in auction patterns:
- FY24 and FY25: BESS accounted for only about 5 per cent of total auctioned renewable capacity.
- FY26: Government auctions involving BESS surged to nearly 40 per cent of all auctioned renewable capacity.
Potential Hurdles: Rising Costs and Project Delays
Despite the optimistic growth trajectory, the path to 50 GWh is not without significant obstacles. Experts warn that a portion of the current pipeline could face setbacks due to economic pressures.
Manish Gupta, Senior Director and Deputy Chief Ratings Officer at Crisil Ratings, noted that nearly 21 per cent of the capacity currently under construction—roughly 12 GWh—faces "weak return potential." This vulnerability could lead to delays in commissioning.
The primary culprit is the volatility of battery prices. Developers had been bidding aggressively on the assumption that battery costs would continue to fall, a trend that held steady until 2025. However, prices have since hardened in 2026. Since developers typically procure batteries about a year after winning bids, those who secured projects in 2025 are now grappling with higher costs than they originally anticipated, making it difficult to hit targeted internal rates of return (IRR) of 12-14 per cent.
Implementation and Procurement Risks
Beyond pricing, the technical ability to execute these massive projects remains a concern. Ankit Hakhu, Director at Crisil Ratings, pointed out that within that 12 GWh of high-risk capacity, about 8-9 GWh is particularly vulnerable due to the limited implementation experience of certain project sponsors.
While BESS projects generally avoid the land acquisition headaches common in traditional renewable projects, they face a different kind of bottleneck: equipment procurement. The sector remains heavily reliant on overseas suppliers for batteries and other vital components. Developers lacking significant scale or procurement expertise may struggle to secure equipment at prices that keep their projects financially viable.
Future Outlook: FY27 and Beyond
Looking further ahead, the momentum shows no signs of slowing down. An estimated 50-55 GWh of BESS capacity is scheduled for commissioning during FY27 and FY28. The distribution of this capacity is expected to be split as follows:
- Distribution Utilities: Expected to account for approximately 40 GWh.
- Commercial, Industrial, and Merchant Markets: Expected to utilize the remaining 10-15 GWh.