Building Nimble Smart Grids: The Rising Role of Energy Storage and Batteries
- November 4, 2025
India is on the verge of a radical transformation in energy storage as it embraces a new paradigm of energy storage use. Though role batteries will play a big role in developing a clean, decarbonised grid, considerable challenges lie ahead, notes Vikram Gandotra.
India’s energy sector is experiencing a significant and lasting transformation. As of September 2025, the country’s total installed power capacity has reached 500.9GW, with a notable 51 per cent (256 GW) coming from non-fossil fuel-based sources. This advancement is mainly fuelled by solar and wind energy and collectively accounts for 180.4 GW. To ensure grid stability amidst these variable sources, India is investing heavily in new smart grids and energy storage technologies.
The foundational shift
The traditional electrical grid was designed for unidirectional power flow, directing electricity from large, manageable power plants to consumers. However, this outdated framework is evolving to accommodate variable renewable energy (VRE), which is increasingly affected by many variable factors, including fluctuations in weather conditions.
This transition poses a considerable challenge, as electricity generation must continuously maintain a balance with the consumption, which varies continuously. Usually, there is a mismatch between the time when renewable energy is available in abundance and when the demand is high. For example, the maximum solar energy is available during midday, while the peak demand on the grid may happen in the evening. On several occasions in May 2025, the spot price of electricity on the IEX (Indian Energy Exchange) tumbled to zero, as a consequence of high availability of renewable electricity at times of low demand. This continuous variability also creates other demands for the grid managers, such as the need to manage fast ramp-up and ramp-down of the generation, fluctuations in voltage and frequency in the grid. While Smart Grid technologies help to provide flexibility, for instance through HVDC (High Voltage Direct Current) and Flexible AC Transmission Systems (FACTS) and visibility and control (through advanced SCADA/EMS and Renewable Energy Management Centres), energy storage solutions provide the much-needed solution to the challenge ofstoring excess electricity and supplying it back to the grid.
India aims to reach a goal of 500 GW of electricity capacity from non-fossil fuel sources by the year 2030. This will significantly boost the use of solar and wind energy. This increase in variable energy generation requires a strong energy storage system to keep the grid stable. Battery Energy Storage Systems (BESS) can react within milliseconds to rectify frequency fluctuations and deliver essential ancillary services.
A spectrum of technologies
The energy storage industry is diverse, and ranges from Electrochemical Battery Energy Storage Systems, Super-capacitors, Flywheels, Thermal storage, Hydrogen or gravity-based based such as Pumped Hydro, all of which are seeing new technical developments. However, currently, electrochemical technology with Lithium-ion (Li-ion) is leading the charge and has emerged as the technology of choice. By 2030, India’s total potential for lithium-ion batteries across various sectors is projected to reach approximately 600 GWh. Several new plants are being set up to meet this huge demand, for e.g. a state-of-the-art Advanced Lithium-ion Battery Plant of India was recently inaugurated in Sohna, Haryana.
While Li-ion batteries are useful for short to medium duration energy storage, they are not the best energy storage alternative for long-duration energy storage (LDES), typically for 10 hours or more. This limitation has driven the search for other technological solutions. Pumped hydro storage is one such alternative. India is focusing on pumped hydro storage for large-scale, grid solutions because of its reliability and durability.
The economic tipping point
India’s energy storage sector is growing rapidly. This growth is linked to falling battery prices and strong government support. The country’s energy storage sector is likely to attract Rs.4.79 lakh crore investment by 2032. The CEA estimates a project requirement of 411.4 GWh (175.18 GWh from PSP and 236.22 GWh from BESS) of energy storage systems by 2032. Progressive Government policies are crucial for this growth. The Production Linked Incentive (PLI) program for Advanced Chemistry Cell (ACC) Battery Storage aims to establish domestic manufacturing capacity for ACC. This program, along with Viability Gap Funding (VGF) for independent battery storage projects, is driving market growth. The benefits of energy storage are being recognised in many practical uses. Utility-scale projects are leading the market, helping to integrate variable solar and wind energy. Moreover, the home battery storage market is expanding, supported by initiatives like the PM-Surya Ghar Yojana, which encourages residential solar and battery installations. In commercial and industrial sectors, companies are using batteries for ‘peak shaving’ to minimise energy usage spikes.
Outlook
India is on the verge of a radical transformation in energy storage as it embraces a new paradigm of energy storage use. There is now no doubt about the role batteries will play in developing a clean, decarbonised grid. However, considerable challenges lie ahead. Global dependence on a few nations and geopolitical vulnerability in essential mineral supply chains call for strategic diversification. An emphasis on new business solutions, such as creating a domestic recycling economy, will go a long wayto alleviate such fears. Furthermore, the damaging environmental impacts of battery production and potentially negative societal, environmental, and economic impacts related to battery disposal require an urgent pivot towards the circular economy. New research and development in emerging areas, such as storage technologies, need to be sped up with larger academia-industry collaboration.
Although the future of energy storage presents opportunities for disruptive technologies, any such benefit will depend on India developing systems that are safe, efficient, reliable, sustainable and secure for generations to come. The coming times are undoubtedly going to be very exciting and promising for the industry.
Vikram Gandotra is President, IEEMA (Indian Electrical & Electronics Manufacturers’ Association)