India set for 12-fold increase in energy storage capacity to 60 GW by FY32: SBI Report

New Delhi [India], December 18 : India is poised for a major boost in energy storage capacity, with projections indicating a 12-fold increase to around 60 GW by FY32, according to SBI report.
This will surpass the growth anticipated for renewable energy sources themselves. The country's energy storage landscape is evolving rapidly, with the proportion of RE projects incorporating storage solutions increasing significantly, from 5 per cent in FY20 to 23 per cent in FY24.
By FY32, the share of variable renewable energy (VRE) in power generation is expected to triple, raising concerns about the stability of the grid,
The growth of VRE could destabilize the grid unless the power system undergoes a significant transformation, particularly with the integration of Energy Storage Systems (ESS), which are crucial in managing this transition.
The challenge lies in the inherent mismatch between the generation of VRE and peak power demand. This mismatch often leads to grid instability, surplus energy during peak production hours, and continued reliance on fossil fuels during non-solar periods.
ESS provide a solution by storing excess renewable energy during high production times and releasing it when demand peaks, thus stabilizing the grid and mitigating issues like the "diurnal duck curve" (a gap in supply and demand during the day).
Battery Energy Storage Systems (BESS) and Pumped Storage Projects (PSP) are expected to dominate the energy storage market, with BESS, in particular, emerging as the dominant technology due to its locational flexibility, rapid response time, and improvements in technology that are further reducing costs.
By FY32, BESS capacity is expected to soar by 375 times to 42 GW, while PSP capacity will grow four-fold to 19 GW.
While PSPs are facing challenges such as long development periods and the risk of stranded assets, their low operational costs and ability to generate reactive power make them an important tool for peak shaving and grid stability.
However, a significant challenge remains in the domestic production of battery cells and components. Currently, around 80 per cent of BESS costs are attributed to battery cells and related components, with most of these sourced from China.
This will help India reduce its dependency on imports and strengthen its battery ecosystem. Major players are already investing heavily in battery manufacturing and component production, with approximately 120 GWh of cell capacities announced, though more investment will be required to meet projected demand.
The funding potential for the BESS ecosystem is significant, with a projected Rs 3.5 trillion opportunity until FY32, fueled by a combination of project-level investments and upstream manufacturing growth.
Pumped Storage Projects (PSPs), though facing a slower growth trajectory due to their long gestation periods, are still expected to contribute Rs. 1.2 trillion in investment by FY32.
These projects have recently attracted interest from the private sector, with several Memorandums of Understanding (MoUs) signed with state governments. States like Andhra Pradesh and Maharashtra, which have significant potential for both VRE and PSP, are expected to see the highest viability.