India likely to commission 45-50 GWh of BESS across fiscals 2027 and 2028

India is likely to commission 45-50 GWh of battery energy storage system (BESS) capacity across fiscals 2027 and 2028, up from around 1 GWh commissioned as of the end of fiscal 2026, according to Crisil Ratings. India’s fiscal years run from April 1 to March 31.

The expansion is supported by a strong project pipeline and continued policy support.

Around 50-55 GWh of BESS capacity is currently scheduled for commissioning over the two fiscals. However, about 8-9 GWh of awarded capacity faces a higher risk of delay, mainly due to weak project returns and limited implementation experience among some developers, Crisil said.

The analysis covers bids awarded between fiscals 2024 and 2026 to nearly 100 renewable energy developers.

The Indian government has accelerated storage-linked auctions to support the integration of a growing share of renewable energy into the national power grid. Projects incorporating BESS accounted for nearly 40% of total auctioned capacity in fiscal 2026, up sharply from about 5% in fiscals 2024 and 2025.

Of the 50-55 GWh of BESS capacity scheduled for commissioning across fiscals 2027 and 2028, around 40 GWh was awarded through government-led auctions, with distribution utilities as offtakers. The remaining 10-15 GWh is expected to serve commercial and industrial consumers directly or be deployed in the merchant market.

“Nearly 21% of the under-construction BESS capacity, equivalent to about 12 GWh, faces weak return potential which may lead to some delays in commissioning. The risk has emerged because battery prices have hardened in 2026, while tariffs bid out for these projects were relatively low,” said Manish Gupta, senior director and deputy chief ratings officer at Crisil Ratings.

“Developers typically procure batteries about a year after securing project bids. Consequently, most projects awarded in 2025 are now exposed to higher battery prices, which have rebounded from the lows witnessed in 2025. As the battery prices were consistently coming down till 2025, developers appeared to have bid aggressively on the assumption that prices would continue their downward trajectory.”

At prevailing battery prices, project returns may be insufficient to achieve the typical target internal rate of return (IRR) of 12%-14%. As a result, developers may defer implementation in anticipation of more favorable battery pricing. At a sample tariff of INR 220,000-250,000 ($2,480-$2,820) per MW per month and battery prices of $55-65/kWh, a project is expected to generate an IRR of 12%-14%.

“Approximately 8-9 GWh out of this 12 GWh of the planned capacity is exposed to an additional challenge: limited implementation experience among project sponsors,” said Ankit Hakhu, director at Crisil Ratings.

“While BESS projects typically face relatively lower land acquisition and connectivity-related challenges compared to conventional renewable energy projects, equipment procurement remains a key risk given the sector’s continued dependence on overseas suppliers for batteries and other critical components. Developers with limited scale or procurement track records may face challenges in securing equipment on competitive terms, which could adversely impact IRRs. Consequently, any increase in procurement costs, coupled with execution-related challenges, could moderate IRRs and/or result in delays in project commissioning. Early signs of these pressures are already evident across parts of the under-construction pipeline with projects getting stranded.”

Most awarded capacity remains either in the development stage or in the early phases of construction. The sector also continues to depend heavily on overseas suppliers for batteries and other critical components. While long-term battery demand is supported by strong structural drivers, geopolitical developments and potential disruptions to global supply chains remain risks to watch.

The growing need for energy storage stems from the rising share of solar and wind in India’s power mix. The two sources accounted for 39% of the country’s installed power generation capacity and around 15% of electricity generation in fiscal 2026. At the end of the fiscal year, India’s total installed power generation capacity stood at 533 GW, including around 206 GW of renewable energy.

The intermittent nature of renewable generation has increased the need for firm and peak-hour power supply and, consequently, energy storage solutions, particularly BESS. The requirement is especially acute for solar, as electricity demand typically peaks in the evening, when solar generation is negligible. BESS can help address the mismatch by storing surplus solar electricity during periods of high generation and supplying it during periods of elevated demand.

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