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New Delhi: India’s energy storage sector is set to grow by over 12 times to 60 GW by FY32, driven by a massive increase in variable renewable energy (VRE) and the need to maintain grid stability, according to an SBICAPS report. With VRE set to triple by 2032, India’s power grid requires advanced storage solutions to prevent grid instability and ensure continuous energy supply.

The report indicates that Battery Energy Storage Systems (BESS) and Pumped Storage Projects (PSP) will form the backbone of this energy storage expansion. BESS capacity is expected to surge 375-fold to 42 GW by FY32, while PSP will grow fourfold to 19 GW over the same period. BESS will likely dominate due to its rapid response capabilities and locational flexibility, while PSP will serve a complementary role, primarily for peak shaving.

“The green imperative is pushing India towards a VRE-heavy grid, but this brings challenges,” the report notes, highlighting that storage systems are essential to “quash the diurnal duck curve,” referring to the mismatch between VRE generation and power demand profiles. BESS can store excess renewable energy during peak generation and release it during non-solar hours, reducing reliance on fossil fuels and stabilizing the grid.

Investment opportunities in the storage ecosystem are estimated at ₹3.5 trillion by FY32, driven by the government’s push for indigenizing battery cell production and creating a self-sufficient component ecosystem. This includes a Production Linked Incentive (PLI) scheme for advanced cell manufacturing, projected to add 55 GWh in battery capacities.

Although BESS has advantages in discharge characteristics and response time, it relies heavily on imported components, with around 80% of its costs tied to batteries and related components. The government’s initiatives, such as waiving interstate transmission charges and setting energy storage obligations (ESO), are expected to stimulate demand and reduce costs further.

For PSP, despite the long gestation period and potential project delays, the government is encouraging investments by collaborating with both private and public sectors. States like Andhra Pradesh and Maharashtra, with significant VRE potential, are expected to lead PSP expansion.

The report concludes that India’s commitment to grid stability through energy storage solutions will require a coordinated approach across policy, investment, and technology. With BESS and PSP at the forefront, India’s energy storage sector is poised to become a vital component of its renewable energy journey, contributing to an estimated ₹5 trillion investment opportunity by 2032.