India has achieved a significant milestone in its renewable energy goals, with 50% of its installed electricity generation capacity coming from non-fossil sources, five years ahead of its 2030 target. However, despite this impressive progress, coal-based thermal plants still generate nearly three-fourths of the country’s electricity. This disparity between installed capacity and actual generation highlights a critical challenge in India’s energy transition.
The main reason for this gap is the intermittent nature of renewable energy sources, such as wind and solar, which have a lower capacity utilization factor (CUF) compared to coal. India’s grid structure is ill-equipped to handle the variability of these renewable sources, resulting in a reliance on coal for base load demand. To balance the energy mix and reduce dependence on coal, large-scale storage is essential.
India currently has around 5 GW of pumped hydro storage (PHS) and less than 250 MWh of battery energy storage systems (BESS). However, the country will need 60 GW of storage by 2030 to balance the utilization of renewable capacity. The high costs of storage, driven by dependence on imported lithium and battery cells, are a significant barrier to expansion. The government has launched initiatives such as the Viability Gap Funding (VGF) Scheme to support BESS development, but it will take years for these systems to reach scale and reduce costs.
Despite these challenges, India is witnessing pioneering storage projects that demonstrate technological viability and lay the groundwork for nationwide replication. Examples include a 15 MW battery storage system in Gujarat, India’s first large-scale BESS facility in Chhattisgarh, and South Asia’s largest BESS in Delhi. These projects show that storage can anchor a more reliable and low-carbon energy system, but significant scaling up is needed to make storage the norm rather than the exception.
The estimated cost of meeting India’s energy storage requirements by 2030 is roughly $60 billion, which poses a significant financial hurdle. However, with government support and growing policy momentum, the country can overcome these challenges and achieve its renewable energy goals. Ultimately, the success of India’s energy transition depends on its ability to integrate large-scale storage into its grid, ensuring a reliable and low-carbon energy system for the future.