India on cusp of major BESS expansion as demand set for J-curve growth: Report

New Delhi [India], December 12 (ANI): India is entering a pivotal phase in Battery Energy Storage Systems (BESS) deployment, with demand expected to rise sharply in the coming years even as the country works to overcome deep structural barriers in manufacturing, technology integration and supply-chain resilience, according to a sector update by Nuvama Institutional Equities.

The report highlights that India currently has about 0.5 GWh of operational BESS capacity and a pipeline of 68 GWh, but this is projected to surge to 236 GWh by 2032. and further to 1,840 GWh by 2047. Battery pack costs have already declined 84 per cent over the last decade and are expected to fall by another one-third by 2030.

According to the report, India is actively integrating BESS into its clean-energy expansion. Policy tools such as viability gap funding for 30 GWh, a 5 per cent storage mandate for new renewable projects, transmission-charge waivers, and the Rs181 bn PLI scheme for advanced chemistry cell manufacturing are beginning to accelerate adoption. Yet, India still faces a 210 GWh shortfall relative to its 2032 requirement.

However, despite the momentum, India's BESS ecosystem continues to grapple with significant bottlenecks. These include limited domestic manufacturing capacity and technology readiness in advanced cell chemistries, heavy dependence on imported components, absence of a robust local vendor network, inadequate testing and certification systems, and shortages of skilled labour and patient capital.

Grid-related challenges, such as untested battery performance under Indian conditions and lack of mature markets for value-stacking services, adds to deployment friction.

The supply-chain vulnerability is particularly acute. China accounts for over 75 per cent of global battery and component manufacturing, and its Li-ion battery exports exceed USD 60 billion annually. This concentration raises concerns for India around cost competitiveness, potential dumping, and cybersecurity risks linked to imported integrated systems.

The report underscores that India's long-term competitiveness hinges on selective value-chain entry rather than attempting to replicate China's full-stack dominance.

Sectors such as aluminium foils and synthetic graphite for anodes offer feasible starting points given India's industrial capabilities. Emerging technologies, particularly sodium-ion batteries, present another opportunity due to India's natural resource advantage, lower dependence on imported lithium, and the chemistry's suitability for stationary grid-scale applications.

Additionally, BESS is expected to play an expanding role as a network asset, helping reduce congestion, defer some transmission investments, and deliver grid-stability services that currently rely on coal, gas and hydro.

A study referenced in the report suggests that integrating 600 GW of non-fossil capacity with 280 GWh of BESS by 2030 could yield annual system-level savings of about Rs 420 billion even at current battery prices. India's BESS trajectory is positioned for multi-decadal expansion, supported by falling costs, industrial policy, and the growing need for firm clean power.

However, the report cautions that cost of capital remains a structural disadvantage for India compared with the US, Europe and China, making financing architecture, R&D partnerships, skilled-workforce development, and ecosystem building critical for competitiveness. (ANI)

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