Energy Storage in India For Scaling Up Its Renewable Energy Capacity

Syllabus: GS3/Energy Infrastructure

Context

• The mismatch between generation and consumption of electricity makes energy storage systems (ESS) indispensable for ensuring grid stability, reliability, and efficient utilization of renewable power.

India’s Renewable Energy Capacity

• India is rapidly expanding its renewable energy capacity to meet its climate commitments and energy security goals.
• Renewable energy sources account for nearly 53% of India’s installed power capacity (283 GW out of 532 GW), with solar energy contributing more than 150 GW.
• However, the increasing share of renewable energy brings a critical challenge i.e. intermittency (a state of stopping and starting repeatedly, or operating at irregular intervals rather than continuously).

What is Energy Storage?

• Energy storage refers to technologies that capture excess electricity generated during periods of high renewable energy production and release it when demand exceeds supply.
  • It acts as a buffer between electricity generation and consumption.
• It helps balance supply and demand, reduce renewable energy curtailment, enhance grid reliability, support peak-load management, and facilitate round-the-clock renewable power supply.

Global Scenario

• Pumped Hydro Storage: Global installed capacity stands at approximately 160 GW.
  • Leading countries: China (~66 GW), Japan (~21.8 GW), and United States (~18.9 GW)
• Battery Energy Storage: Global battery storage capacity is estimated at around 270 GW.
  • According to the International Energy Agency (IEA), 108 GW of new battery storage was added in 2025, representing a 40% increase over 2024.
  • China accounted for nearly 60% of global additions, followed by the United States and Europe.
  • Deployment is accelerating in Australia and the Middle East, where storage is increasingly viewed as essential for energy security and renewable integration.

India’s Energy Storage Status

• Current Installed Capacity: BESS (~0.27 GW); PHS (~7.2 GW)
• Central Electricity Authority (CEA) Projections for 2035-36: 174 GW / 888 GWh by 2035-36.
  • BESS (80 GW / 321 GWh); PHS (94 GW / 567 GWh)
• Storage systems with 4–6 hours duration will be crucial for integrating growing volumes of renewable energy beyond 2030.

Expansion Pipeline

• Pumped Hydro Projects:
  • 13,120 MW under construction.
  • 9,580 MW approved and awaiting construction.
  • Nearly 75,000 MW under survey and investigation.
• Battery Storage Projects:
  • 10,658.94 MW / 28,739.32 MWh under construction.
  • 22,347.15 MW / 69,836.70 MWh under tendering.

Major Energy Storage Technologies

• Pumped Hydro Storage (PHS): It is the most mature and widely used large-scale storage technology globally.
  • Advantages: Suitable for long-duration storage, high reliability and long operational life, and large-scale energy storage capability.
  • Limitations: Requires specific geographical conditions, high initial capital investment, environmental and land acquisition concerns.
• Battery Energy Storage Systems (BESS): It stores electricity in electrochemical form and releases it when required.
  • Lithium-ion batteries, particularly Lithium Iron Phosphate (LFP) batteries, dominate the global market, and accounted for over 90% of global battery storage additions in 2025.
  • Advantages: Fast response time, modular deployment, and suitable for short-duration storage (4–6 hours).
  • Limitations: Dependence on critical minerals, battery degradation over time, and import dependence for cells and components.

Other Emerging Storage Technologies

• Concentrated Solar Thermal Storage: Uses mirrors and molten salts to store solar heat, which is later converted into electricity.
• Compressed Air Energy Storage (CAES): Stores compressed air in underground caverns and releases it to drive turbines during peak demand.
• Flywheel Energy Storage: Stores energy in rapidly spinning rotors and provides instant power support for grid stabilization.
• Gravity-Based Storage: Stores energy by lifting heavy masses and generates electricity when they descend.

Challenges in Energy Storage in India

• Import Dependence: About 75–80% of lithium-ion cells used in India are imported, while cells account for nearly 80% of a battery system’s cost.
  • It creates risks related to geopolitical tensions, supply-chain disruptions, trade restrictions, and price volatility.
• High Capital Costs: BESS requires substantial upfront investment. Although battery prices are declining globally, large-scale deployment remains expensive.
• Limited Domestic Manufacturing: Domestic production of advanced battery cells and critical components remains inadequate.
  • Reliance on imported technology affects self-reliance and cost competitiveness.
• Critical Mineral Constraints: Lithium, cobalt, nickel, and graphite are essential for battery manufacturing.
  • India has limited reserves of many of these minerals and depends on imports.
• Land and Environmental Concerns: Pumped Hydro Storage Projects (PSPs) require large land areas and suitable topography.
  • Environmental clearances, biodiversity concerns, and displacement issues can delay projects.
• Long Gestation Period of PHS Projects: Pumped hydro projects involve extensive surveys, approvals, and construction timelines.
  • Delays can affect the pace of renewable energy integration.
• Grid Integration Challenges: Integrating storage systems into existing transmission and distribution networks requires significant upgrades.
  • Operational and regulatory frameworks are still evolving.
• Financing and Investment Risks: Uncertainty regarding revenue streams and market mechanisms can discourage private investment.
  • Long payback periods increase financial risks.
• Battery Disposal and Recycling Issues: Large-scale deployment will generate significant battery waste in the future.
  • India’s battery recycling ecosystem is still developing.
• Regulatory and Policy Gaps: Standardized regulations for storage procurement, pricing, and grid services are evolving.
  • Policy uncertainty can slow investment and adoption.
• Technological Dependence: Advanced battery technologies and manufacturing know-how are concentrated in a few countries.
  • It limits India’s technological autonomy in the storage sector.
• Growing Future Demand: Storage requirements are expected to rise sharply as renewable energy capacity expands.
  • Scaling storage infrastructure at the required pace remains a major challenge.

Initiatives and Efforts to Promote Energy Storage in India

• National Energy Storage Requirement Planning: CEA has projected a requirement of 174 GW/888 GWh of energy storage capacity by 2035-36.
  • Provides a roadmap for integrating large-scale renewable energy into the grid.
• Viability Gap Funding (VGF) for BESS: It aims to make projects financially viable, and to reduce storage costs and accelerate deployment.
• Production Linked Incentive (PLI) Scheme for ACC Batteries: Supports domestic manufacturing of Advanced Chemistry Cells (ACC).
  • Reduces dependence on imported battery cells and strengthens the domestic value chain.
• National Programme on Advanced Chemistry Cell (ACC) Battery Storage: Encourages indigenous manufacturing of next-generation battery technologies.
  • Promotes technological self-reliance and energy security.
• Development of Pumped Storage Projects (PSPs): Fast-tracking approval and construction of pumped hydro storage projects.
  • Several projects are under construction, while many more are under survey and investigation.
• Renewable Energy Storage Obligation (ESO): Introduced by the Ministry of Power as part of Renewable Purchase Obligations (RPOs).
  • Mandates designated entities to procure a certain share of electricity from energy storage-backed renewable sources.
• Green Energy Corridor Programme: Strengthens transmission infrastructure for integrating renewable energy and storage systems.
  • Facilitates efficient evacuation of renewable power across regions.
• National Green Hydrogen Mission: Promotes green hydrogen production using renewable energy.
  • Hydrogen can serve as a long-duration energy storage medium in the future.
• PM Surya Ghar: Muft Bijli Yojana: Encourages rooftop solar adoption and distributed energy resources.
  • Creates opportunities for future integration of household-level battery storage systems.
• Battery Waste Management Rules, 2022: Introduces Extended Producer Responsibility (EPR) for battery manufacturers.
  • Promotes recycling, resource recovery, and sustainable battery disposal.
• Critical Minerals Strategy: India is securing overseas mineral assets and strengthening domestic exploration of lithium and other critical minerals.
  • Supports long-term battery manufacturing and storage deployment.
• International Cooperation: Participation in initiatives such as the International Solar Alliance (ISA) and partnerships for clean energy technologies.
  • Facilitates technology transfer, investment, and best-practice sharing in energy storage.

Source: IE