India’s BESS Capacity Seen Rising to 45-50 GWh by FY2028

India’s renewable energy sector is expected to see a sharp increase in battery energy storage system (BESS) deployment, with 45-50 GWh of capacity likely to be commissioned during fiscals 2027 and 2028, compared with around 1 GWh commissioned by the end of fiscal 2026, according to CRISIL Ratings.

The projected growth is supported by a strong pipeline of projects under implementation and continued policy support. However, around 8-9 GWh of awarded capacity faces a higher risk of delays due to limited implementation experience among developers and relatively low tariffs amid higher battery prices, CRISIL said.

The analysis covers bids awarded between fiscals 2024 and 2026 across nearly 100 renewable energy developers.

The increasing requirement for BESS is linked to the rising share of renewable energy in India’s power mix. Renewable energy, comprising solar and wind, accounted for around 39 percent of the country’s installed power generation capacity and about 15 percent of electricity generation in fiscal 2026.

As renewable generation is intermittent, the growing share of solar and wind has increased the need for firm and peak-hour power supply. BESS can store surplus electricity generated during periods of high renewable output and supply it when demand rises, particularly during evening hours when solar generation declines.

The government has also accelerated storage-linked auctions to facilitate greater integration of renewable energy into the grid. Projects incorporating BESS accounted for nearly 40 percent of total auctioned capacity in fiscal 2026, compared with around 5 percent in fiscals 2024 and 2025.

CRISIL said 50-55 GWh of BESS capacity is scheduled for commissioning across fiscals 2027 and 2028. Around 40 GWh has been awarded through government-led auctions, with distribution utilities as offtakers, while another 10-15 GWh is expected to cater to commercial and industrial consumers or the merchant market.

“Nearly 21 percent of the under-construction BESS capacity, equivalent to about 12 GWh, faces weak return potential which may lead to some delays in commissioning,” said Manish Gupta, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings.

According to Gupta, battery prices have hardened in 2026, while tariffs discovered for these projects were relatively low. Developers typically procure batteries about a year after securing project bids, exposing projects awarded in 2025 to higher battery prices.

Battery prices had declined consistently until 2025, leading some developers to bid aggressively on the expectation that prices would continue falling. However, the subsequent increase in battery prices could weaken project returns and make it difficult to achieve the typical target internal rate of return of 12-14 percent, CRISIL said.

Developers could therefore defer project implementation while waiting for more favourable battery prices.

Of the approximately 12 GWh facing weak return potential, around 8-9 GWh is also exposed to limited implementation experience among project sponsors, said Ankit Hakhu, Director, CRISIL Ratings.

While BESS projects generally face fewer land acquisition and connectivity challenges than conventional renewable energy projects, equipment procurement remains a key risk due to India's continued dependence on overseas suppliers for batteries and other critical components.

Developers with limited scale or procurement experience could face challenges in securing equipment on competitive terms, potentially affecting project returns and commissioning timelines, CRISIL said.

The ratings agency added that early signs of these pressures are already visible in parts of the under-construction pipeline, with some projects getting stranded.

As a result, the remaining 45-50 GWh of BESS capacity is considered more likely to be commissioned during fiscals 2027 and 2028.

Most awarded capacity, however, remains at the development stage or in the early stages of construction. CRISIL said that the sector's dependence on overseas suppliers for batteries and other critical components also leaves it exposed to geopolitical developments and global supply-chain disruptions.