Batteries are the ultimate multitool that the Indian power system needs

At the 26th United Nations Conference of the Parties (COP26), India’s Prime Minister Narendra Modi announced a target of 500 gigawatts (GW) of non-fossil fuel capacity by 2030. While not formally part of India’s nationally determined contributions (NDCs), this goal remains central to national energy planning, including the 14th National Electricity Plan (NEP-14).

By June 2025, India had installed a cumulative 168 GW of solar and wind capacity, with 145 GW in the pipeline. NEP-14 projects solar and wind to supply over 50% of total generation by 2032, reaching 365 GW and 122 GW, respectively. To support this, the country needs to integrate storage of 74 GW / 411 gigawatt-hours (GWh) (27 GW / 175 GWh of pumped storage and 47 GW / 236 GWh of BESS) by 2032 as per NEP-14.

As of June 2024, India had 500 MWh of operational BESS and a development pipeline of 121 GWh — 62 GWh under execution and 59 GWh in the tendering stage. 

BESS integration can happen at various stages of the electricity system, whether co-located with generators, embedded within transmission and distribution networks or deployed behind the meter for end consumers. The ability to site and size BESS assets based on system needs makes them highly flexible operationally, enabling them to deliver services at multiple points across the grid.

1.1 The many roles of batteries in a renewables-dominated grid

As variable renewable energy penetration grows, the system value of BESS for different applications will continue to increase. Some of the key applications of grid-scale batteries are:

• Firming up renewable power

Dispatchability: Coupling renewables with BESS allows the delivery of variable renewable power on demand, making it firm and dispatchable. 

Schedule compliance: BESS helps renewable generators adhere to their committed generation schedules by compensating for short-term deviations and avoiding associated penalties.

• Shifting renewable power across time and space

Energy arbitrage: BESS enables time-shifting of electricity by storing low-cost renewable energy and discharging it when prices or demand are high. This can also provide congestion relief in grids during oversupply.

Load management: BESS placed on the distribution side can discharge during peak demand hours, helping defer transmission upgrades.

• Ancillary services: The fast ramping capability of BESS makes it one of the most effective technologies for delivering critical grid services. They can support grid stability by helping maintain frequency and voltage within prescribed limits. They can also assist in restoring power after a large-scale outage, commonly referred to as a black start.

1.2 The opportunity for marketcraft

This report explores key merchant BESS applications in India where the asset operates without fixed contracts and earns revenue by participating in various segments of power markets:

• Energy arbitrage in wholesale electricity markets: BESS captures value by storing electricity during low price periods, often aligned with solar surplus hours, and discharging during high price periods, typically coinciding with high demand.

• Provision of frequency regulation in the ancillary services market: BESS can inject or absorb power to balance supply and demand in the grid. Its fast ramping capability helps maintain frequency within acceptable limits and supports overall grid stability. 

A core principle of merchant BESS applications is that revenues are proportional to the challenges they help solve. In this case, the challenge is managing price volatility and frequency fluctuations. This report begins by assessing the outlook on these critical challenges (Chapter 2). It then explores the revenue opportunities they unlock for BESS in India’s evolving power markets (Chapter 3).