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India to Expand Energy Storage Capacity 12-Fold to 60 GW by FY32: SBI Report
Team Finance Saathi
19/Dec/2024
What's covered under the Article:
- India’s energy storage capacity is projected to rise 12-fold to 60 GW by FY32, driven by renewable energy integration.
- Battery Energy Storage Systems (BESS) and Pumped Storage Projects (PSP) to dominate with significant investments.
- Domestic battery cell production challenges and heavy reliance on imports remain key hurdles.
India is poised for a transformative leap in energy storage capacity, which is forecasted to expand 12-fold to approximately 60 GW by FY32, according to a recent report by SBI. This remarkable growth is set to outpace the rise in renewable energy (RE) generation, positioning energy storage as a cornerstone of India’s renewable energy strategy.
Rising Role of Energy Storage in Renewable Energy Projects
The adoption of Energy Storage Systems (ESS) in renewable energy projects has grown significantly, with their share rising from 5% in FY20 to 23% in FY24. As Variable Renewable Energy (VRE) is expected to triple its contribution to power generation by FY32, managing grid stability becomes a critical challenge. The mismatch between renewable energy generation and peak power demand has led to concerns about grid destabilisation, particularly the phenomenon of the “diurnal duck curve”.
ESS, particularly Battery Energy Storage Systems (BESS) and Pumped Storage Projects (PSP), are pivotal in addressing these issues. They can store surplus renewable energy during periods of high production and release it during peak demand, ensuring a stable and efficient power supply.
BESS and PSP: Market Dominance and Growth Potential
Battery Energy Storage Systems (BESS) are projected to dominate the energy storage landscape, with capacity expected to grow by an astonishing 375 times to 42 GW by FY32. Despite its reliance on imported components—which account for 80% of its costs—India is making strides in enhancing domestic production capabilities.
On the other hand, Pumped Storage Projects (PSP), while requiring longer development timelines, are set to grow four-fold to 19 GW. PSPs remain a crucial part of the energy storage mix, thanks to their low operational costs and ability to perform peak shaving and enhance grid stability. However, challenges such as stranded asset risks remain a concern for these projects.
Investment Opportunities in Energy Storage
The energy storage sector in India is expected to attract substantial investments. The BESS ecosystem alone presents a US$ 41.22 billion (Rs. 3,50,000 crore) investment opportunity until FY32, underscoring the market’s potential. Similarly, PSPs are anticipated to secure investments worth US$ 14.13 billion (Rs. 1,20,000 crore) over the same period.
Challenges in Domestic Battery Production
A significant hurdle in scaling up BESS in India is the reliance on imported battery components, which account for a majority of its costs. Efforts are being made to bolster domestic battery cell manufacturing to reduce import dependency, with government policies and incentives driving this transition.
Future Outlook
With energy storage capacity set to soar, India is on track to become a leader in renewable energy integration and grid stability solutions. This growth is essential to meet the rising demand for clean and reliable energy, ensuring sustainability and economic development.
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