India’s energy storage inflexion point: tenfold battery capacity surge set for 2026

A surge in the battery energy storage capacity of India is expected, where an addition of almost ten times to around 5 GWh in 2026 will be made from 507 GWh in 2025. The extended capacity is owed to the key major projects lined up and is ready to move into the execution stage.

2026 will be the year when India will witness a turning point, especially for this sector, since the projects which were in the pipeline for the last two years are not beginning to come on stream, as per the study released by the India Energy Storage Alliance (IESA).

2025 mainly focused on tendering the activities for these projects and 2026 will mainly focus on testing the ability of the industry in terms of delivering these projects on the ground, based on a particular timeline between 18 and 24 months. Additionally, IESA stated that 2025 saw an unprecedented tendering where 69 tenders amounted to a capacity of 102 GWh.

These marks are almost the same as the tenders which were issued combined in the timespan between 2018 and 2024, which resulted in cumulative capacity. This capacity, under execution, moved by 84 per cent to 244 GWh, making it possible for the large-scale commissioning in 2026.

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IESA said in a statement, "India’s energy storage sector is poised for a transformative breakout in 2026. the shift from awarding contracts to implementing projects represents a critical inflection point for the industry."

On the other hand, IESA's president, Debmalya Sen, has raised a concern regarding the performance and financing of these projects, which will be the utmost challenge in the coming times. He further added that major players will be looking out for the performance of these projects and align with what has been previously committed. According to him, the major test for these projects after entering the operational phase will be on securing funding, especially those which are sanctioned at a time of low tariffs.

Within IESA's study report, one of the astounding trends highlighted is the sharp fall in tariffs in 2025. Moreover, at the beginning of 2025, the two-hour energy storage system tariffs also fell from INR 2.21 lakh per MW per month to INR 1.48 lakh per MW per month by the end of the same year, in an APTRANSCO tender.

Solar-plus-four-hour BESS projects are also expected to see aggressive pricing, after tariffs fall to INR 2.70 to INR 2.76 per unit range. This is because there are more than 50 new bidders who have already entered the market.

In 2026, many high-profile projects are scheduled, which are expected to alter the sector's trajectory, especially in January, when Rajasthan will float a tender for India's largest Solar-plus-four-hour BESS projects at Pugal Solar Park. In March, Adani will commission a 1,123 MW/3,530 MWh battery storage project in Gujarat. This project is currently described as one of the world's largest single-location BESS installations.

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Vinayak Walimbe, the Managing Director of Customised Energy Solutions, stated, “The transition from tendering to execution in 2026 represents a watershed moment for India’s energy storage sector.”

The study report further included a strong policy support, which also includes a second tranche of Viability Gap Funding, worth around INR 5,400 crore for 30 GWh of standalone BESS projects, alongside a 20 per cent domestic value additional requirements. Apart from this, an extension till 2028 to the interstate transmission system charge waivers is required for the pumped storage and solar-plus-BESS projects.

States are providing higher commitments to ramp up Rajasthan's mandate of 5 per cent energy storage required for renewable projects which are beyond 5 MW, alongside Bihar's target of 6.1 GWh by 2030. 

During this phase, the pumped storage hydro segment received a competitive bidding pipeline, which is expected to expand to 132 GWh from 50 GWh in 2024. Owing to this, JSW and UPPCL inked a 1.5 GW/12 GWh Pumped Hydro PPA at INR 77.2 lakhs per MW per year in Uttar Pradesh.  

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