India’s energy storage market – What to expect in the next decade


India’s stationary storage market is in a massive growth phase from around 25GWh of batteries installed in 2020 across front-of-the-meter and behind-the-meter applications, write Avanthika Satheesh, Industry Research Manager, and Dr Rahul Walawalkar, President & MD, Customized Energy Solutions.

The front of the meter storage market is still in its nascent stage with a total installed capacity of 28MW/20MWh as of March 2021 across seven projects. There is a strong pipeline of projects which are in various stages of construction accounting for 360MW/312MWh.

There are also GWh-scale RFPs that are coming up with different agencies such as Solar Energy Corporation of India and NTPC (formerly the National Thermal Power Corporation).

These are primarily renewable energy integration and distribution company-side integration.

Presently, the behind-the-meter market comprises the major share of the total stationary market and is expected to pass 30GWh in 2027. Behind-the-meter installations are mainly for power backup applications, driven by the low grid reliability situation existing in several parts of the country.

In 2020, the annual battery sales for power backup in inverters, uninterruptible power supplies (UPS) and telecom towers together constituted nearly 18GWh. These segments can be termed as traditional segments, as they have been existing for decades and are largely based on lead-acid (Pb-acid) batteries.

Traditional BTM battery segments

The UPS segment has been supporting the emergency load in the manufacturing, data centres, IT and healthcare sectors, while the inverter segment primarily covers residential and small commercial consumers.

While valve regulated lead–acid batteries are used in UPS applications, flooded lead-acid batteries of 1-2kWh capacity are installed in inverter applications. Most telecom towers in the country are backed with batteries and diesel gensets.

Lithium-ion penetration has kickstarted in all of these applications, with the telecom sector having the highest penetration of 20% in 2020. The techno-commercial benefits of Li-ion batteries over Pb-acid types are driving this change in this application. In the UPS segment, data centres are the early adopters of Li-ion batteries. Due to the smaller footprint of Li-ion batteries compared to valve regulated lead–acid, the extra space is utilised to accommodate more servers or network infrastructure.

Emerging BTM battery segments

The emerging segments in the behind-the-meter battery market are rooftop solar, diesel genset hybridisation and microgrids. Though these segments presently account for approximately 1.2GWh of annual battery sales, it has the potential to grow five times by 2027.

Growing electricity tariffs and long duration power cuts faced by the commercial and industrial (C&I) sector are driving the battery demand from these two segments. Besides, the price of solar panels and Li-ion batteries have dropped significantly during the past decade, so the blended cost of energy stored in batteries from solar PV has become cost comparable to that of C&I tariffs being paid by the customers.

The C&I electricity tariffs in several states in India are over US$0.10/kWh (Figure 1). The levelised cost of energy (LCOE) of solar+storage is compared with that of the C&I tariffs for a battery penetration of 50% of that of solar PV capacity.

The price of Li-ion battery packs is expected to drop from $180/kWh in 2020 to under $100/kWh by 2027 while the cycle life is also increasing for stationary storage batteries. With the drop in battery prices, a longer duration of batteries is expected to be installed for this application.

The LCOE of a four-hour battery system with solar PV is expected to drop below US$0.09/kWh by 2025. Domestic gigafactories that are ancipated to start production in 2024 are expected to reduce these prices further, starting in 2025.

Diesel genset hybridisation is an important market. The installed capacity of diesel gensets is around 90GW in India. Of this at least 2% of the diesel gensets are in operation for an annual running time of 1000+ hours. Diesel consumption can be significantly reduced by hybridising these gensets with a battery. In several cases analyzed, C&I customers facing average three-hour power cuts daily were found to benefit significantly by hybridizing DG set with a Li-ion battery for a 1-1.5 hour duration. Opex costs were reduced by up to 30% annually with a pay-back period of 5-6 years.

Li-ion battery penetration

The annual Li-ion battery demand in behind-the-meter applications crossed 1GWh in 2019. As the Li-ion battery prices drop and become comparable to that of Pb-acid, higher penetration of the chemistry is expected in the market. By 2027, the annual demand is expected to grow ten times to reach 10GWh, growing at a CAGR of 39%. Presently, there are more than thirty Li-ion battery pack assemblers in the market supplying to both the stationary and emobility sectors.

Despite a strong demand for Li-ion batteries for stationary applications and a growing demand from the emobility sector, battery cells are still imported largely from China or South Korea. To address the challenge associated with local battery manufacturing, in May 2021 the government of India approved a Rs18,100 crore (US$2.4 billion) production-linked incentive (PLI) scheme for building 50GWh of advanced chemistry cell battery manufacturing in the country by 2027.

The scheme aims to incentivize 50GWh of advanced cell batteries manufactured in the country with high local value addition. The minimum capacity that can be bid is 5GWh and the maximum is 20GWh. With the incentive programme, it is expected that the locally manufactured advanced batteries, including Li-ion chemistry, is expected to become competitive with global suppliers.

Batteries beyond BTM application

India has a strong renewable energy target to include 450GW of renewable power into the grid by 2030. Integrating this amount of renewable power on the grid is expected to create demand for 100GWh of energy storage.

In addition to this, in July 2021 the Ministry of Power announced plans to float tenders of 4GWh for the installation of battery storage for ancillary service applications. Customized Energy Solutions forecasts the demand for front-of-the-meter storage to grow at 104% CAGR between 2020-2030.

To learn more about India Stationary Storage Market trends, challenges, case studies, LCOE analysis, policy landscape analysis, the detailed report is available at

About the authors

Rahul Walawalkar is a strong votary of improving energy storage and e-mobility in India. He founded the India Energy Storage Alliance in 2012 and continues to serve as its President and has served as a board member for Energy Storage Association, USA and Chair of the Global Energy Storage Alliance. He has played an instrumental role in shaping the Advanced Chemistry Cell Battery Manufacturing Program and worked on drafting the national energy storage mission for the Ministry of New and Renewable Energy, India. He holds a PhD in Engineering and Public Policy from Carnegie Mellon University, a Master’s degree in Energy Management from NYIT, United States and a BE from Walchand College of Engineering, India.

Avanthika Satheesh has over a decade’s experience in market research and consulting services in the energy sector. Her research expertise is on emerging technologies such as energy storage, renewable energy, EV charging, and smart grid. She holds a Master of Engineering in Power Systems from Anna University, a Bachelor of Technology in Electrical Engineering from Kerala University and a Post Graduate Diploma in Business Administration from Symbiosis International University, Pune.