Whalesbook
The Storage Gap
India plans to integrate vast amounts of renewable energy, which will require an estimated 411.4 GWh of energy storage by 2031-32, largely from BESS. The Central Electricity Authority (CEA) recognizes BESS as vital for grid stability, helping manage power supply and demand. However, operational BESS capacity is currently only 0.8 GWh. This is despite around 12.8 GWh of BESS capacity being awarded in auctions between 2022 and May 2025. This huge gap between awarded projects and those actually built shows a major implementation problem that threatens India's renewable energy goals.
Key Challenges Facing BESS Projects
Aggressive Bidding and Delayed Contracts
The BESS sector has faced aggressive underbidding, partly due to falling global battery prices in 2023-24. This has threatened developers' profitability, especially as costs for materials like copper, aluminum, and battery cells have risen again, made worse by a weaker rupee. Adding to these financial troubles, state power distributors (Discoms) have significantly delayed signing Power Purchase Agreements (PPAs). Discoms, struggling with debt, are reluctant to commit to long-term fixed prices, expecting prices to fall further or opting for cheaper short-term power. This hesitation has led to over 6.4 GW of awarded BESS capacity being cancelled.
Grid Congestion and Power Waste
New renewable energy capacity is being added in India faster than the necessary transmission lines are built. This mismatch causes grid congestion and forces renewable power to be wasted through curtailment, especially in states like Rajasthan and Gujarat. In Rajasthan alone, curtailment has affected 3-4 GW of solar capacity since March 2025, costing an estimated ₹250 crore. Some reports show peak-hour power curtailment reaching 100% at times in major renewable energy states. Transmission line construction is about 50% behind new renewable capacity additions, meaning renewable energy must be shut down, wasting clean power while coal plants continue to operate.
Early-Stage Domestic Manufacturing
Although government programs like the ₹18,100 crore Production Linked Incentive (PLI) scheme aim to boost domestic manufacturing of Advanced Chemistry Cell (ACC) batteries, the industry is still new. The scheme targets 50 GWh of manufacturing capacity, but as of October 2025, only 1.4 GWh (2.8%) had been commissioned. Manufacturers find it hard to meet local content rules. India's reliance on imported battery cells and key minerals like lithium and cobalt leaves it vulnerable to global supply chain disruptions and price swings. Experts warn that waiting for domestic manufacturing to ramp up could delay progress for years.
Risks to India's Energy Goals
The positive outlook for India's BESS plans hides significant operational and structural problems. While the government's renewable energy targets are ambitious, poor coordination and execution are weakening their chances of success. The low tariffs secured through aggressive bidding (as low as ₹2.1/kWh) are now threatened by rising commodity costs and a weaker rupee, impacting project profitability. This is worsened by the weak financial state of Discoms, which consistently delay signing crucial PPAs, leading to cash flow uncertainty and stalled projects. Furthermore, inadequate transmission infrastructure means even completed renewable projects face curtailment, reducing the effectiveness of investments in generation and storage. India's dependence on imported battery parts and its limited domestic manufacturing capacity also leave it vulnerable to global supply chain issues and political shifts. Even the PLI scheme, designed to boost domestic production, has been slow to deliver, indicating a considerable lag in building self-sufficiency.
Path Forward for India's BESS
Despite current hurdles, the Indian BESS market is expected to grow significantly, potentially reaching about $1.2 billion by 2030 with a compound annual growth rate of around 27%. By 2031-32, India's storage needs are projected to dramatically increase to 411.4 GWh. To overcome the current implementation challenges, India needs a practical strategy. This includes partnering with experienced global firms for quicker deployment, while simultaneously speeding up the development of domestic manufacturing capabilities and crucial grid infrastructure. Such an approach will help ensure BESS supports, rather than hinders, the country's energy transition. Failure to address these core execution issues could lead India to miss its vital renewable energy targets.