India is poised for a remarkable surge in energy storage capacity, with projections indicating a 12-fold growth to around 60 GW by FY32, according to a recent SBI report. This expansion is expected to surpass the growth rate of renewable energy generation. The integration of energy storage in renewable projects has climbed from 5% in FY20 to 23% in FY24. As variable renewable energy (VRE) is set to triple in power generation share by FY32, concerns over grid stability are intensifying due to potential mismatches between VRE output and peak electricity demand. Energy Storage Systems (ESS) will play a crucial role in stabilizing the grid by storing excess renewable energy during peak production and discharging it when demand spikes, thus mitigating challenges like the “diurnal duck curve.”
The energy storage market will primarily be driven by Battery Energy Storage Systems (BESS) and Pumped Storage Projects (PSP). BESS is forecasted to expand dramatically to 42 GW by FY32, a 375-fold increase. PSP capacity is also expected to rise significantly, quadrupling to 19 GW. Although PSPs face longer development timelines and the risk of underutilized assets, their low operational costs make them essential for grid stability and peak demand management.
India’s heavy reliance on imported components poses a challenge, as imports account for about 80% of BESS costs. To tackle this, investments are being directed towards domestic battery cell production. The BESS ecosystem is anticipated to attract investments totaling $41.22 billion by FY32. In parallel, PSPs are expected to secure $14.13 billion in funding by the same year. These efforts aim to reduce import dependency and enhance the country’s energy security.
