In the tidal wave of the global energy transition, India is an emerging economy that suffers from double pressure brought about by surging energy demand and environmental pollution, thus needing to find clean and effective energy solutions urgently. In the southern Indian suburb of Chennai, a huge battery energy storage system around the clock for machine power supply successfully replaced the previous spewing out of rolling diesel generators at the Coca-Cola factory. This is one of the few battery-powered factories in India, playing an important role in the journey of energy transition away from traditional polluting energy sources.

With its flexible and efficient features, battery energy storage technology can effectively solve intermittence and instability in renewable energy generation, improve energy utilization, and help the country achieve the goal of energy transition.

Status of India Battery Energy Storage Market

India’s lithium-ion battery storage industry is able to store energy from wind or solar in the absence of sun or wind conditions; though it presently constitutes only 0.1% share of the global Battery Energy Storage System, the development momentum is rapid. This year, about one-third of India’s battery infrastructure is in operation, and this remarkable progress underlines India’s strong determination and momentum on the path of sustainable energy development.

The key role that the battery energy storage will play pertains to flexible and efficient performance. It effectively solves the intermittency and instability problem in renewable energy generation, improves energy utilization, and helps to reach the goal of energy transition. Status of India Battery Energy Storage Market

India Battery Energy Storage Market Developing at a Fast Pace, Competing with the Growth of Global Emerging Markets

As of March 2024, India’s installed energy storage capacity reached 219.1MWh (approximately 111.7MW), demonstrating its determination to promote energy storage technology and strengthen energy infrastructure. India plans to install 1.6GWh of standalone battery energy storage by 2027, integrating 9.7GW of renewable energy to fuel a sustainable energy future.

In detail, the global energy storage market has been growing and is projected to reach a valuation of US$31.47 billion in 2023, further projected to grow to US$120-150 billion by 2030, growing at a CAGR of 33.10% from 2022 to 2032, and 8.72% from 2024 to 2029.

This event brings forth a nascent home market in India for battery energy storage as compared to the world’s strategic objectives for investments made into space hitherto, casting it as an indispensable actor on the global landscape-one of gigantic opportunity, hence highlighting growing stature. Therefore, commitments in this country toward prudent and futuristic energy innovation will surely assure the alignment of global energy storage transformation under the helm of India.

Challenges and Opportunities for the Indian Battery Energy Storage Industry

Challenge Analysis

Lack of awareness among customers:

India is in the course of transitioning towards a global energy structure. As an emerging economy, there is a double challenge facing India: the surging energy demand and environmental pollution. Urgently, clean and efficient energy solutions should be found. In contrast, some companies know little about the technology of energy storage through a battery, fearing it is too costly and its technology unstable, causing resistance to the promotion of it in the market.

Currently, the Battery Energy Storage Market of India is in a fledgling state with approximately 100 MW of battery storage and another 3.3 GW of Clean Energy Storage originating from hydropower. A demand of approximately 74 GW of  batteries, hydro, and nuclear energy storage is expected by the Government of India by the year 2032. Estimates by experts project that the requirements can be actually as high as double this amount to meet India’s Energy Requirements.

However, the market acceptance of battery energy storage has grown gradually, with major Indian conglomerates announcing massive investments in the sector. An example is the Tata Group, which plans to establish the first lithium-ion super plant in Gujarat, with an initial investment worth 1.57 billion dollars. In addition, the Indian government has come out with a range of policies on the development of the battery storage industry.

Supply chain dependence:

India, facing double pressure of surging energy demand and environmental pollution in the wave of global energy transition, urgently needs clean and efficient energy solutions. However, some companies do not know enough about battery energy storage technology, are worried about the cost and stability, and therefore have their market promotion blocked.

Presently, the installed battery energy storage capacity in India stands at just 100 megawatts, and another 3.3 gigawatts of hydropower energy storage. The Government projects that 74 GW of energy storage will be needed by 2032, though experts feel this number could actually be double, if not more. The good news is that acceptance is growing and companies are scaling up investments. Reliance is proposing a 5,000-acre plant in Gujarat; Goodenough plans to invest $53 million in a 20 million kWh battery plant in Jammu and Kashmir by 2027. Thus, the company is seeking to invest in a new battery plant in Jammu and Kashmir, which will be completed by the end of the year.

According to Bangalore-based analyst Alexander Hoghwin-Root, increasing energy storage capacity is crucial. Clean energy with enough storage can already compete with coal at a lower price. Battery prices across the world are falling rapidly and if this trend continues, the energy storage systems will be more competitive. California battery energy storage has become the evening peak of the largest resource, the United Kingdom, China, Tonga, and other countries are also following suit, and India is expected to keep pace.

However, the Indian battery energy storage industry also faces supply chain risks. The battery supply chain is highly dependent on China; once the trade friction, geopolitical conflict, and other international situations changes, raw material supply ,and production costs will be hit hard.

Opportunity Outlook

Favorable policy:

The Indian government is aggressively promoting energy transition-investing US$452 million last year, adding 4 GW of battery energy storage by 2031. However, some companies prefer low-cost coal power generation due to the subsidies given to coal-fired power plants. The government will announce more incentives for clean energy storage in the budget this July to boost the development of the battery energy storage industry.

Market demand is great, which includes:

With the rapid development of India’s economy and the improvement of living standards, energy demand has continuously grown very fast within the power sector. With the increasing population and extremely hot weather, the popularity of air conditioners and other large-energy-consuming equipment has brought an urgent need to ensure a steady and reliable supply of power. According to the International Energy Agency, India’s electricity demand grew 7% last year, and the next three years are expected to have average an annual growth rate of not less than 6%. This brings huge development space for the battery energy storage market, promoting the rapid development of related technologies and industries.

Synergistic Development of Energy Storage and Renewable Energy:

Energy storage systems are in high demand within the two realms of renewable energy consumption and energy efficiency. The energy that is stored during peak hours is supplied during lean periods, bringing minimal loss in energy and affording the whole system more stability. Meanwhile, integrating energy storage and clean energy will lower electricity costs, counteracting the previous thinking that clean energy is expensive; it has, therefore, gained strong momentum among key technologies regarding energy transition in the future.

Outlook for India BESS Market for the Next Five Years

Large-scale solar and wind capacity is coming online, and the Central Electricity Authority estimates that demand for BESS will reach 32 GW/160 GWh by 2030. Multiple factors have put the market in an advantageous position to see rapid growth: government policy support and international investment.

Large-scale energy storage will play a crucial role in integrating more and more renewable energy into the grid. While this is being integrated, distributed energy storage solutions will be adopted more and more by commercial, industrial, and residential customers seeking energy independence. Meanwhile, BESS integrated with electric vehicle charging infrastructure will promote growth in urban energy storage demand, driving India’s clean energy transition forward.

Ongoing advances in battery chemistry, along with local manufacturing facilitated through the Indian government’s production incentives, continue to improve the already good cost profile and scalability of BESS. In the coming five years too, BESS will be a critical factor for providing ancillary services and underpinning hybrid renewable energy projects in the transformation of the energy landscape of India by making India a global leader in energy storage innovation.