Relying on Renewables: Government initiatives drive energy storage adoption in India

Energy storage systems (ESSs) are widely used in electric vehicles (EVs), microgrids and renewable energy systems. The growing renewable energy capacity addition and rising demand for EVs are key drivers for ca­pa­city expansion and cost reduction in battery storage technologies. To increase the uptake of storage systems, the government has announced several policy and regulatory initiatives and floated several tenders and projects for its de­velopment.

Power Line provides an overview of these developments…

Recent policy initiatives

The government is formulating policies at the state and national levels to bolster renewable supply, construct operational reserves and improve system flexibility by building ESS capacity. In July 2022, the Ministry of Power (MoP) released the energy storage obligation (ESO) that ma­ndates the procurement of 1 per cent of electricity from solar and wind projects with storage capacity in 2023-24. This mandate will remain in place until financial year 2029-30, with the ESO req­uirement increasing on a yearly basis. Hence, from 2029-30, the MoP requires buyers to utilise 4 per cent of the total electricity from solar and wind projects equipped with storage capacity. In March 2022, the MoP issued guidelines for the procurement and utilisation of ba­ttery ESSs (BESSs) as components of generation, transmission and distributi­on ass­ets, including ancillary services. Ear­lier, in June 2021, interstate transmissi­on ch­ar­g­es were waived off for BESS pr­o­jects commissioned up to June 30, 2025.

In the Union Budget 2022-23, the central government announced plans to introduce a battery swapping policy and formulate interoperability standards, considering the constraint of space in urban areas, which hinders the large-scale installation of charging stations. The private sector will be encouraged to develop sustainable and innovative business models for “battery- or energy-as-a-service”. This will improve efficiency in the EV ecosystem. NITI Aayog is leading the formulation of battery swapping policies and battery-swapping standards with all relevant stakeholders. It also announced a 20 per cent basic customs duty on lithium-ion cells and lithium-ion battery packs, while also extending customs duty exemptions to the import of capital goods and machinery required for manufacturing lithium-ion cells for batteries used in EVs.

The Ministry of Heavy Industries (MHI) has awarded production-linked incentives (PLI) worth Rs 181 billion to Relian­ce New Energy Limited, Ola Electric Mo­bi­lity Private Limited and Rajesh Exports Limited for setting up advanced chemistry cell (ACC) facilities in India. It incentivises the domestic production of batteries to build a cumulative capacity of 50 GWh. Under the ACC PLI programme, the manufacturing facility has to be es­tablished within a period of two years. The incentives will be disbursed thereafter, over a period of five years, on the sale of batteries manufactured in India.

In addition to the capacities allocated by the MHI under the PLI scheme, private players are expected to set up a battery manufacturing capacity of approximately 95 GWh. For instance, in July 2023, Amara Raja Batteries Limited laid the foundation stone for a lithium cell and battery pack facility, with capacities of 16 GWh and 5 GWh, respectively, in Mahbubnagar district of Telangana. In April 2023, Su-Kam Power Systems Limi­ted entered into an agreement with the Himachal Pradesh government to establish a sustainable energy storage park in the state. The company intends to manufacture e-mobility and solar en­ergy products on 50 acres of land. Re­portedly, the company will manufacture EV batteries and chargers for both two- and four-wheelers and solar panels, expanding its solar product range.

Further, the Bureau of Indian Standards has adopted IS 16046 (Part 2): 2018/IEC 62133-2: 2017 for secondary cells and batteries containing alkaline or other non-acid electrolytes; IS 17092 for electrical energy storage systems; and IS 17387: 2020 for battery management systems. It has also formulated two standa­rds for EV battery swap systems – IS 17896 (Part 1): General and Guidance; and IS 17896 (Part 2): Safety Requirements.

The Indian government is reportedly working on providing incentives totall­ing Rs 37.6 billion to companies for promoting battery storage projects. In the Union Budget 2023-24, the government revealed plans for battery storage projects with a total capacity of 4,000 MWh. Furthermore, the central government is working on a PLI scheme for EV battery components.

Tenders and project-related developments

Several large-scale standalone energy storage as well as hybrid renewable po­wer and energy storage tenders have been launched.

In July 2023, Serentica Renewables sign­ed a first-of-its-kind standalone ener­gy storage capacity offtake contract with the Greenko Group. As part of this contract, Serentica will leverage Greenko’s en­ergy storage capabilities to utilise a cumulative capacity of 1,500 MWh from its up­co­ming energy storage projects in Andhra Pradesh and Madhya Pradesh. This deal will augment Serentica’s efforts to deliver round-the-clock (RTC), firm and des­pat­chable renewable energy to its industrial customers with an annual as­s­urance of over 95 per cent and a 15-min­ute time bl­o­ck assurance of over 85 per ce­nt. It will uniquely position the co­m­pa­ny as one of the select few renewable independent power producers in the co­untry that can offer a true RTC solution.

In April 2023, NTPC Renewable Energy Limited (NTPC REL) invited bids from eligible bidders to participate in a global competitive bidding process for the selection of developers for interstate tra­nsmission system-connected energy sto­rage solutions in India. The energy storage solution should have a minimum capacity of 1,500 MW and a total energy storage capacity of 9,000 MWh, with a project size of at least 600 MWh and 100 MW capacity. The developer will set up the project on a build-own-operate basis, and the selected bidder will enter into an energy storage service agreement with NTPC REL on an annual fixed charge ba­sis for a period of 25 years.

In April 2023, the Asian Development Bank (ADB) and Tata Power Delhi Dis­tribution Limited entered into an agreement to subscribe to non-convertible de­bentures for Rs 1.5 billion to enhance Delhi’s power distribution through grid enhancements. Additio­nally, a $2 million grant was provided to partially finance the purchase and integration of a pilot BESS. The 10 MWh BESS is South Asia’s first grid-scale energy storage pro­ject at the distribution transformer level. It will allow electricity to be stored and delivered on demand, reducing grid instability and providing the flexibility required to integrate intermittent solar and wind energy resources. The grant to finance the BESS is provided by the Goldman Sa­chs and Bloomberg Philan­thro­pies’ Cli­mate Innovation and Deve­lo­p­ment Fu­nd, administered by ADB.

In April 2023, IndiGrid commissioned the pilot project of a solar panel bank, combined with a BESS, at its Dhule substation in Maharashtra to meet the substation’s auxiliary consumption re­qu­irements. This facility will serve as a test bed for augmenting the company’s capabilities in order to participate in energy transition opportunities within the solar and BESS space.

In January 2023, ONGC Tripura Power Company Limited signed an MoU with Assam Power Distribution Company Limited to develop a 250 MW/500 MWh BESS project in a phased manner in Assam by incorporating a joint venture company. An investment of Rs 20 billion will be allocated for developing the project. The project will aid the state in improving power availability during peak load hours, integrating renewable energy generation with the electricity grid and enhancing grid reliability.

The auction for the first stand alone battery storage tender was concluded last year. In September 2022, JSW Renew En­ergy Five Limited won the auction conducted by the Solar Energy Corpo­ration of India (SECI) to set up 500 MW per 1,000 MWh stand-alone BESS projects under the build-own-operate-tra­ns­fer model with a bid of Rs 1.08 million per MWh per month.

In December 2022, private player Gre­en­ko Energies won NTPC REL’s reverse au­ct­ion for energy storage, secu­ring a bid for a 500 MW per 3,000 MWh pumped hydro energy storage plant. Greenko submitted a bid of Rs 2.79 million per MW per year and won the total capacity. NTPC REL plans to use the energy storage facility to meet its RTC renewable energy needs with a wind-solar profile.

SECI has invited research and development (R&D) proposals to demonstrate scalability in gravity-based or mechanical ESS, green hydrogen-based ESS, and other non-electrochemical ESS technology, among pilot clean energy projects. It said that the storage capacities of the projects should be up to 500 kWh with a suitable solar generation system in place. Furthermore, India is expected to unveil a Rs 216.5 billion scheme to encourage the installation of grid-scale BESS, with Rs 37.65 in viability grants and reduced import duties on BESS components.


While the outlook for the energy storage sector looks positive, the sector still faces several challenges. To begin with, the exploration and R&D of advanced energy storage technologies require a substantial initial investment, deterring several potential investors from establishing a robust energy storage market in India. Another significant challenge is sourcing raw materials, many of which are rare earth minerals not abundantly available in the country. To address this issue, the Indian government plans to provide viability gap funding to promote the development of 4,000 MWh of BESS, as per the union budget. Further, safety concerns continue to hamper growth in the segment due to a lack of confidence in these technologies among producers, investors and potential consumers. Environmental concerns are also a crucial consideration as storage systems and batteries can have a significant im­pact on the environment, not only during disposal but also during extraction and mining. Furthermore, despite the growing demand for energy storage te­ch­nologies in the Indian market, the domestic manufacturing set-up is not well established, and the majority of the demand is met through imports. The lack of long-duration batteries, standardisation and timely degradation, along with the limited energy density of existing batteries, are additional impediments to the growth of the market.

A well-defined market structure for energy storage technologies has not been established in the country, and the sector remains highly dependent on the policy support provided by the government. Analysing local experiences, insi­g­hts and challenges could prove beneficial in establishing effective policy and regulatory mechanisms. Moreover, ba­ck-end support in terms of cybersecurity, communication and transmission soft­ware, and grid upgradation will be es­sential for establishing a resilient and reliable energy storage network.


According to NITI Aayog, the annual market for stationary and mobile batteries in India could range between $6 billion and $15 billion by 2030, with app­roximately $12 billion from cells and $3 billion from pack assembly and integration. As of 2023, India has 50-100 MW of BESS storage. However, according to the Central Electricity Authority’s projections, India needs to develop a BESS ca­pacity of 51-84 GW, with the capability to operate for up to five hours.

In the coming years, as these technologies become established in the market, the need for new transmission infrastructure and plants may be significantly reduced or eliminated, thereby reducing both economic and environmental costs. Given the vital role energy storage plays in meeting intermittency challenges of green energy, the sector should grow in tandem with the overall renewable energy segment in India to enable smoother integration of renewables in the coming years.

Ongoing developments, such as the rise in renewable energy deployment, a shift towards decentralised power systems, greater deployment of hybrid energy systems, and the growing need for grid stability and energy security are likely to provide a huge impetus to the development of energy storage technologies in In­dia. In the coming years, the sector can expect to witness a rise in investments, with a focus on not only lithium but also other emerging technologies su­­ch as redox flow batteries, supercapacitors and hydrogen. Creating an en­vironment conducive to establishing a robust domestic manufacturing set-up will be crucial. Moreover, a shift towards the exploration of less expensive and abundantly available components acro­ss the energy storage supply chain will go a long way in making India’s energy sector self-sufficient and secure.