India is accelerating the development of Energy Storage Systems to strengthen grid stability and support the growing share of renewable energy in the power sector. According to the National Electricity Plan (Generation) Gazette notified in May 2023, the country has projected significant expansion of Battery Energy Storage Systems (BESS) and Pumped Storage Plants (PSP) over the coming years. The government has also introduced multiple policy, regulatory, market and manufacturing measures to promote Energy Storage Systems across the electricity value chain.
The National Electricity Plan projects a Battery Energy Storage System (BESS) requirement of 8.68 GW/34 GWh by 2026-27, increasing to 47.24 GW/236 GWh by 2031-32. The estimated investment required for BESS deployment is about ₹3.49 lakh crore by 2031-32. For Pumped Storage Plants (PSP), the projected installed capacity requirement is 7.45 GW/47 GWh by 2026-27 and 26.69 GW/175 GWh by 2031-32, with an estimated investment of around ₹1.29 lakh crore by 2031-32.
The government also referred to NITI Aayog’s report titled “Sectoral Insights: Power (Vol. 7)”, released in February 2026, which states that energy storage will become a critical requirement for managing the variability associated with renewable energy integration. The report notes that the government has already introduced coordinated policy, regulatory, demand-side and supply-side measures to encourage the deployment of Energy Storage Systems, including Battery Energy Storage Systems.
Energy Storage Systems Policy Measures and Market Support
The government has implemented several policy and regulatory reforms to strengthen the deployment of Energy Storage Systems. The Electricity Rules were amended in December 2022 to formally recognise Energy Storage Systems as an integral part of the power system, allowing their participation in generation, transmission and distribution. In October 2022, Energy Storage Systems were included in the Harmonised Master List of Infrastructure issued by the Ministry of Finance, enabling access to long-term and lower-cost financing.
Further policy initiatives include the Guidelines for Preparation of Resource Adequacy Plans issued in June 2023, which incorporate energy storage as a key planning resource for meeting peak demand and maintaining system reliability. The National Framework for Promotion of Energy Storage Systems, issued in September 2023, provides a roadmap for deployment, market integration and regulatory support. The CEA (Measures Relating to Safety and Electric Supply) (First Amendment) Regulations, 2025 were notified on 30 March 2026, introducing safety requirements for Battery Energy Storage Systems, while the CEA (Technical Standards for Construction of Electrical Plants and Electric Lines) Amendment Regulations, 2026 specify construction standards for BESS.
To support market development, the government has provided 100% ISTS charges waiver for eligible BESS and PSP projects under specified commissioning and construction timelines. For co-located BESS projects, the waiver has been extended for projects commissioned up to June 2028, while co-located PSP projects are eligible if construction work is awarded by June 2028. In January 2022, the Central Electricity Regulatory Commission (CERC) allowed storage-based resources to provide ancillary services, including secondary and tertiary reserves.
The government has also notified Tariff-Based Competitive Bidding (TBCB) guidelines for BESS and PSP procurement, allowed electricity supplied from BESS to participate in the High-Price Day-Ahead Market launched in March 2023, provided Viability Gap Funding for 43.8 GWh of BESS capacity, exempted closed-loop off-stream PSP projects from Central Electricity Authority concurrence requirements, and required consumers using diesel generator sets to shift to cleaner backup solutions, including energy storage, under the amended Electricity (Rights of Consumers) Rules, 2020.
On the manufacturing and infrastructure side, the Ministry of Heavy Industries is implementing a Production-Linked Incentive (PLI) Scheme with an outlay of ₹18,100 crore to establish 50 GWh of Advanced Chemistry Cell manufacturing capacity, including 10 GWh dedicated to grid-scale stationary storage. Infrastructure support of ₹1 crore per MW has been provided for hydro PSP projects up to 200 MW, while projects above 200 MW are eligible for ₹200 crore plus ₹0.75 crore per MW.
CERC has also permitted separate grid connectivity during non-solar hours to facilitate storage-based shifting of renewable power. Through amendments to the Electricity Rules in September 2025, Energy Storage Systems can now be developed, owned, leased or operated by consumers. In February 2025, the Central Electricity Authority (CEA) issued an advisory recommending co-location of Energy Storage Systems with solar projects, suggesting storage capacity of at least 10% of installed solar capacity for a minimum duration of two hours.
