The Role of BESS in India’s Renewable Energy Goals: Facilitating Renewable Integration and Grid Stability
India is witnessing explosive growth in BESS, with ~12.2 GWh of tenders announced so far. It represents only ~5 percent of the projected demand for the next seven years, underscoring immense opportunities in India's transition to sustainable energy solutions.
June 20, 2025. By News Bureau
India's Net Zero goals, announced at COP26 in Glasgow, reflect a bold commitment to sustainability and climate leadership. Through the ‘Panchamrit’ agenda, India targets 500 GW of non-fossil fuel energy capacity by 2030 and aims for 50 percent of its energy requirements to come from renewable sources. Additionally, the country plans to cut projected carbon emissions by 1 billion tonnes and reduce carbon intensity by 45 percent over 2005 levels by 2030. These efforts align with India's ultimate goal of achieving Net Zero emissions by 2070, showcasing its dedication to combating climate change and driving global environmental progress.
Renewable energy penetration is steadily rising, with key states achieving remarkable milestones. States like Rajasthan and Karnataka have surpassed a 30 percent share of RE in electricity generation, while Gujarat, Andhra Pradesh, and Tamil Nadu have breached the 20 percent mark. However, this growth is accompanied by increasing demand peakiness (Figure 1). Delhi leads with a peak-to-average load ratio of nearly 2.0, while states like Haryana, Punjab, Karnataka, and Telangana exceed 1.6. Managing this variability is critical for ensuring grid stability and sustaining the renewable energy transition.
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The ‘Duck Curve,’ illustrating the mismatch between solar energy production and demand profiles, highlights the growing need for energy storage. As renewable energy penetration reaches 30-40 percent, challenges such as grid instability, frequency loss, and uneven T&D infrastructure loading become more pronounced. Energy storage bridges the temporal gap between energy generation and demand, ensuring grid stability and reducing reliance on fossil fuels. By addressing these issues, storage systems enable a seamless transition to renewable energy while mitigating the operational and financial constraints associated with high RE penetration.
India is witnessing explosive growth in BESS, with ~12.2 GWh of tenders announced so far (8 GWh in this year alone from Jan ’25). States like Karnataka, Kerala, Tamil Nadu, and Gujarat are leading with standalone BESS projects. The Ministry of Power projects a need for ~41 GW/236 GWh of BESS capacity by 2031-32, signalling a shift from 2-hour systems to 4- and 8-hour solutions. Current tenders represent only ~5 percent of the projected demand for the next seven years, underscoring immense opportunities in India's transition to sustainable energy solutions.
India’s state-level BESS policies are evolving to promote adoption and growth. Legal recognition for energy storage projects was established in 2022, providing a regulatory framework. The Production Linked Incentive (PLI) scheme for ACC battery storage was launched in 2021. Additionally, ISTS charges were waived off in 2021 to encourage renewable energy integration. In 2024, guidelines for Viability Gap Funding (VGF) were introduced to support cost-effective BESS deployment, fostering a robust ecosystem for energy storage across Indian states.
BESS implementation in India faces several challenges. Developers are concerned about aggressive project cost expectations and securing reliable product and performance warranties. Key issues include the bankability of Indian partners, enforcement of contracts with foreign entities, and mitigating risks like safety, currency fluctuations, and tariff uncertainties. Additionally, ensuring robust after-sales service in India, despite commitments from technology providers, remains a critical challenge. Addressing these issues is essential to fostering confidence and accelerating the adoption of BESS across the nation.
Indian BESS manufacturers can address these concerns to create a large opportunity (Figure 2). Some of these are:
- Localise aggressively to gain from the BCD differential between cells and modules (~6.5 percent)
- Develop deeper product insights during localisation to credibly offer product and performance warranties
- Provide Innovative financial structures to overcome the current limitation of the small size of Indian BESS developers
- Local supply chains mitigate customs duty-related risks and also reduce exposure to USD
- Build I&C and after-sales capabilities, opportunities to build BESS-specific service infrastructure
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To summarise, BESS is vital for India’s renewable energy goals, enabling better renewable integration and grid stability. Currently in its nascent stage, the ongoing 12 GWh tenders represent only 5 percent of the projected requirement over the next seven years. Challenges include muted project IRRs, dependency on price discovery via VGF amendments, and the critical selection of cell suppliers based on real-world performance under Indian conditions. Developers face concerns regarding warranties and managing long-term risks. Despite these challenges, Indian BESS manufacturers hold the potential to address these issues and unlock significant opportunities for growth and innovation.
- Venkat Rajaraman, Founder & CEO, Cygni Energy
please contact: contact@energetica-india.net.
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