India's Energy Storage Capacity Projections and Policy Framework
The National Electricity Plan (Generation) gazette notified in May 2023 projects substantial energy storage capacity requirements for India. By 2026-27, the country requires 8.68GW/34GWh of Battery Energy Storage System (BESS) capacity and 7.45GW/47GWh of Pumped Storage Plant (PSP) capacity. By 2031-32, these requirements escalate to 47.24GW/236GWh for BESS and 26.69GW/175GWh for PSP, representing a total estimated investment of approximately ₹4.78 lakh crore (₹3.49 lakh crore for BESS and ₹1.29 lakh crore for PSP).
NITI Aayog's February 2026 report titled 'Sectoral Insights: Power (Vol. 7)' identifies energy storage as critical for managing renewable energy integration variability. The government has implemented 18 coordinated measures across policy, regulatory, demand-side, and supply-side domains to promote Energy Storage Systems development.
Policy and Regulatory Measures
The Electricity Rules were amended in December 2022 to explicitly recognize ESS as integral to the power system, enabling participation across generation, transmission, and distribution functions. In October 2022, ESS was included in the Harmonised Master List of Infrastructure by the Ministry of Finance, facilitating access to long-tenure, lower-cost financing. June 2023 saw guidelines for Resource Adequacy Plans requiring state utilities to incorporate energy storage for peak demand management and system reliability.
A National Framework for Promotion of Energy Storage Systems was issued in September 2023 providing a comprehensive deployment roadmap. The CEA (Measures Relating to Safety and Electric Supply) (First Amendment) Regulations, 2025 notified on March 30, 2026, established safety requirements for BESS, while CEA's (Technical Standards for Construction of Electrical Plants and Electric Lines) Amendment Regulations, 2026 specified construction standards for BESS.
Demand-Side Enablers and Market Development
Significant ISTS charges waivers have been implemented: 100% waiver for BESS projects commissioned by June 2025 with 25% annual reduction thereafter, and for Hydro PSP projects where construction work is awarded by June 2028. Co-located BESS projects receive 100% ISTS waiver until June 2028 commissioning, and co-located PSP projects until June 2028 construction award.
In January 2022, CERC allowed storage-based resources to provide ancillary services including secondary and tertiary reserves. Tariff-Based Competitive Bidding Guidelines for BESS and PSP procurement create transparent mechanisms for large-scale storage procurement. The amended Electricity (Rights of Consumers) Rules, 2020 mandate consumers using diesel generators to shift to cleaner backup solutions including energy storage within state-specified timelines.
BESS electricity can participate in the High-Price Day-Ahead Market launched in March 2023, responding to peak price signals. Viability Gap Funding is provided for developing 43.8 GWh BESS capacity, and closed-loop off-stream PSP projects are exempt from CEA concurrence requirements.
Supply-Side and Manufacturing Measures
The Ministry of Heavy Industries is implementing a Production-Linked Incentive Scheme with ₹18,100 crore outlay for establishing 50 GWh Advanced Chemistry Cell manufacturing capacity, with 10 GWh earmarked for grid-scale stationary storage. Enabling Infrastructure Support provides ₹1.0 crore per MW for hydro PSP projects up to 200 MW, and ₹200 crore plus ₹0.75 crore per MW for projects exceeding 200 MW.
CERC allows separate grid connectivity during non-solar hours, enabling additional renewable capacity at existing substations. September 2025 Electricity Rules amendments permit energy storage systems to be developed, owned, leased, or operated by consumers. In February 2025, CEA issued an advisory recommending co-location of ESS with solar projects with at least 10% of installed solar capacity for minimum two-hour duration to improve dispatchability.
This comprehensive framework was disclosed by Minister of State for Power Shri Shripad Naik in a written reply to the Rajya Sabha on July 27, 2026.