India is on track for a significant transformation in its renewable energy sector, with storage-backed renewable capacity expected to soar to 25–30 gigawatts (GW) by FY28, according to Crisil Ratings. This sharp rise from near-zero levels in FY25 underscores a pivotal shift in India’s energy landscape, driven by the central government’s focus on grid stability and peak demand management using energy storage technologies.

A Strategic Pivot Toward Firm Renewable Energy

India’s aggressive energy transition goals now go beyond merely adding solar and wind capacity. The challenge of intermittency in renewable sources, especially solar and wind, has necessitated a move toward firm and dispatchable green power, where energy storage systems (ESS) play a crucial role.

These systems, especially in the form of solar-plus-storage and dispatchable renewable energy projects, are designed to provide reliable electricity during peak demand hours and ensure grid stability, a key need as India’s electricity consumption continues to grow.

According to Crisil Ratings, this transition is not just aspirational but is actively underway, with storage-backed renewable capacity expected to contribute over 20% of the total new renewable energy capacity between FY25 and FY28.

Tenders Reflect Strong Government Commitment

The Indian government’s policy push is evident in the tendering pattern. In 2024, storage-linked renewable energy projects accounted for 25% of total capacity awarded by central agencies, amounting to 11 GW, a notable rise from just 11% or 2.5 GW in 2023.

This allocation reflects the shift from plain solar or wind projects to more reliable hybrid projects that include energy storage to meet India’s evolving power demand profiles. These hybrid solutions are now considered crucial for India’s transition to a sustainable energy future, especially as the grid deals with variability due to weather-dependent sources.

Additionally, these storage-backed projects require oversizing of energy generation systems by 2.5 times the contracted power, due to the need to store sufficient energy for dispatch during non-generation periods. This results in a cumulative pipeline of 34 GW, even though the tendered capacity stands at 11 GW.

Risks and Challenges Ahead

Despite the promising outlook, Crisil Ratings has raised cautionary flags. All of the awarded capacity is currently in early construction or pre-construction stages, making the sector vulnerable to implementation risks.

Key risks include:

• Delays in signing power offtake agreements, which are essential for securing long-term revenues

• Financing hurdles, especially given the high capital requirements of storage systems

• Execution and operational delays, which could derail timelines and inflate costs

These risks are especially prominent in India’s power sector, where land acquisition, regulatory clearances, and funding have historically posed significant bottlenecks.

Storage Systems as Catalysts for Green Energy Growth

Storage is increasingly seen not just as a supporting system, but as a key enabler of India’s long-term renewable energy vision. By storing excess power generated during the day (especially from solar) and releasing it during evenings or peak load times, battery storage and pumped hydro systems allow for continuous, dependable electricity supply from intermittent sources.

This capability is expected to become more critical as India pursues its target of 500 GW of non-fossil fuel-based capacity by 2030. Experts believe that without adequate storage, a large part of variable renewable energy would remain underutilized, leading to curtailment and economic inefficiency.

Favourable Market Trends and Investor Interest

The increasing share of storage-linked projects in tenders reflects growing investor confidence in the segment. Domestic and international developers alike are actively pursuing these tenders, drawn by the long-term potential and government incentives.

Developers are also buoyed by falling costs of battery storage technologies, with lithium-ion battery prices declining globally. This trend, if it continues, will enhance the commercial viability of hybrid renewable-plus-storage models.

Moreover, central agencies such as SECI (Solar Energy Corporation of India) and NTPC Renewable Energy Ltd are structuring tariff-based competitive bidding, which allows for market-driven pricing while maintaining grid affordability.

Policy and Regulatory Support to Expand

The Indian government is expected to expand support mechanisms for storage technologies, including:

• Viability gap funding for pumped hydro and battery storage

• Dedicated storage policy framework, defining commercial guidelines and operational norms

• Flexibility in tariff design for time-of-day pricing, making storage projects financially viable

These regulatory interventions will be key to ensuring that storage-backed renewable energy becomes mainstream rather than marginal in India’s power mix.

Conclusion

Crisil Ratings’ projection of 25–30 GW of storage-backed renewable capacity by FY28 marks a turning point in India’s clean energy journey. This surge is not only about adding megawatts but ensuring quality, reliability, and flexibility in power generation.

India is moving steadily toward firm renewable energy, where storage solutions will be indispensable. While risks remain, particularly in execution and financing, the combination of policy support, private sector participation, and technological evolution is likely to drive a transformative shift in India’s energy landscape.

In essence, energy storage is evolving from a support service to a strategic pillar of India’s renewable energy future, with far-reaching implications for grid modernization, energy security, and climate commitments.

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