India’s energy storage capacity to rise 12-fold: SBICAPS report

India’s energy storage capacity is projected to increase 12-fold to 60 GW by FY 2032, as outlined in a new SBICAPS report. This expansion is anticipated to outpace the growth in renewable energy (RE) sources, as RE tenders increasingly include storage, rising from 5% of projects in FY 2020 to 23% by FY 2024.

Battery energy storage systems (BESS) are expected to make up the majority of this growth, with projected expansion to 42 GW by FY 2032—a 375-fold increase from current levels—owing to their flexibility in location, advancing technology, reduced tariffs, and fast response times. 

Meanwhile, while currently dominant, pumped storage projects (PSPs) are also set to grow, reaching 19 GW by FY 2032, as they provide low operating costs and help improve grid stability.

The report highlights a funding opportunity in developing India’s BESS ecosystem, with a potential investment of Rs 3.5 trillion by FY 2032. Cell manufacturing expansion will contribute Rs 800 billion in medium-term investment, aided by policies like interstate transmission charge waivers and energy storage obligations, which drive demand for storage solutions.

Lenders to BESS projects should assess factors such as firm PPAs/PSAs from reliable DISCOMs, project models (co-location or standalone), and the cell technology used. Though PSPs have longer gestation periods and regulatory hurdles, their stable operation costs and ability to support grid stability will sustain their growth for peak shaving needs.