Utility-scale battery storage is expected to accelerate rapidly in India over the next seven to ten years. As per the International Energy Agency’s (IEA’s) recent report on “Batteries and Secure Energy Transitions”, India will become the world’s third-largest market for utility-scale batteries by 2030, with capacity additions of nearly 9 GW.
The Indian energy storage market has evolved considerably in recent years. This is driven by both the emerging needs and requirements of the country’s power sector, characterised by burgeoning renewable energy capacity as well as strong policy support. In India, solar PV plus battery storage is already more competitive than coal, and it will remain so in the years ahead.
Energy storage targets and financial support will help the country become a large market for battery storage. The increasing solar capacity will further drive up flexibility needs and increase the utility of energy storage. As per the power ministry’s National Framework for Promoting Energy Storage Systems, new renewable energy plants (excluding hydropower) are required to pair at least 5 per cent of their installed capacity with storage.
Innovative tariff structures and financial incentives are also giving an impetus to battery systems. India has allocated $2.5 billion through its production-linked incentive scheme in a bid to develop a domestic battery manufacturing industry. In addition, the progressive introduction of a three-rate tariff, differentiating between normal hours, “solar” hours and peak hours (with prices in solar hours 10-20 per cent lower than normal hours), is providing an incentive to deploy behind-the-meter storage.
In terms of cost, the IEA’s report notes that the global average cost for four-hour duration battery systems is expected to fall by 40 per cent over the next eight years, from $290 per kWh in 2022 to $175 per kWh by 2030. Notably, the cost reduction is expected to be steeper in India.
Overall, battery energy storage is expected to significantly scale up in the country in the coming years, backed by policy and financial support, as well as the growing renewable energy capacities.