Battery storage is emerging as a central pillar of India’s energy transition, with Bernstein highlighting that its role will only grow bigger in the coming years as falling prices, policy support and grid requirements converge.
The economics of battery energy storage systems (BESS) have improved sharply, with global turnkey costs for two-hour storage falling 63% in the past two years, driven by surplus EV battery supply and declining raw material costs.
Prices discovered in Indian tenders reflect this trend, dropping from nearly 5 lakh Indian rupees/MWh/month to about 1 lakh rupees/MWh/month, translating into storage costs of 3.5–5 rupees/kWh.
That compares favorably with the average 6 rupees/kWh spread between day and evening power prices, giving merchant batteries a clear case for viability.
“With recent uptick in curtailment, charging is literally free,” Bernstein noted, underlining the commercial appeal of BESS.
At the policy level, India’s Ministry of Power recently raised its 2032 battery storage target from 47GW to 74GW.
This revision reflects the rapid scaling-up of tender activity: nearly 60 GWh of storage has already been awarded or is under bidding, with 31 GWh of standalone BESS expected online by FY28.
In addition, solar-plus-storage projects are gaining traction, with 11 GWh already awarded and another 18 GWh under tender.
To support deployment, the government has expanded viability gap funding to 43 GWh of projects.
Battery storage also has a structural role in balancing India’s increasingly renewable-heavy grid.
As solar and wind capacity rise, curtailments are becoming common, while thermal plants face operational constraints such as a 55% minimum load factor.
Co-locating BESS with coal plants is now being piloted by NTPC to avoid running units at uneconomic loads.
This development underscores how storage is no longer just an enabler of renewable power but also a stabilizer for conventional generation.
Technological shifts are also reinforcing the case for BESS. Chinese manufacturer CATL is commissioning a 40 GWh sodium-ion battery plant this year, a technology that promises lower raw material costs and longer cycle life.
If successful, such alternatives could reduce India’s dependence on lithium, which it lacks domestically.
India’s private sector is moving quickly as well, with Reliance Industries planning a 40 GWh LFP cell facility by 2026 and other players such as Ola Electric, Exide and Amara Raja ramping up capacities.
On a cost-competitiveness basis, solar plus BESS already delivers electricity at 4.5–5.5 rupees/kWh, undercutting new thermal (5–6 rupees/kWh), nuclear (6–7 rupees/kWh) and hydro (5–6 rupees/kWh).
This shift is altering India’s long-term generation mix and investment priorities. While pumped storage remains competitive for long-duration needs, Bernstein emphasized that BESS will dominate shorter-duration applications and continue to gain ground as costs decline further.
Source :
https://www.investing.com/news/economy-news/why-battery-storage-is-expected-to-play-a-very-big-role-4233473
