India Set To Add Over 25 GW Of Storage-Backed Renewable Energy By FY2028

India’s installed capacity of storage-backed renewable energy is expected to grow significantly, rising from almost zero to over 25 gigawatts (GW) by fiscal 2028 as per CRISIL Ratings. This growth will contribute to over 20% of the total renewable energy (RE) capacity addition in the next three years. The central government’s efforts to promote a sustainable and stable power supply are driving this expansion.

Storage-backed renewable energy projects help address the challenge of intermittent power generation from solar and wind sources. These projects include firm and dispatchable renewable energy solutions, such as solar with battery storage. They are capable of delivering power on demand, especially during peak hours in the morning and evening, thereby supporting grid stability.

The government is encouraging such projects as part of its strategy to make renewable energy a stable part of India’s energy mix. In 2024, about 25% (or 11 GW) of the capacity awarded through central government tenders included storage-backed renewable energy. This is a significant increase from 11% (or 2.5 GW) in 2023. Due to high energy needs, these projects require oversizing—nearly 2.5 times the contracted capacity—which has led to a cumulative project pipeline of around 34 GW.

However, most of the awarded capacity is still in the early stages of development or construction. This exposes the projects to certain risks related to implementation, such as delays in finalizing power purchase agreements (PPAs), securing funds, and completing construction. Experts believe these risks are low to moderate. Many developers have already taken proactive steps, especially in acquiring land and arranging grid connections, which help reduce construction-related risks.

According to Crisil Ratings Director Ankit Hakhu, offtake risk is low for about half of the upcoming capacity, as these projects already have 25-year fixed-tariff PPAs, offering revenue stability. The remaining projects face higher offtake risks due to tariffs that are roughly 55% higher than those of traditional solar and wind projects. However, these are still expected to secure PPAs soon due to the government’s push for cleaner energy, the capability of these projects to match thermal power generation patterns, and rising renewable purchase obligations (RPOs) for distribution companies.

Funding is also unlikely to pose major problems. With strong expected cash flows and long-term contracts in place, banks and investors are expected to support these projects. Additionally, the sponsors behind most of these bids have a proven ability to raise funds.

Crisil Ratings Associate Director Ankush Tyagi noted that nearly 70% of the capacity awarded in 2024 has already secured key requirements like land and grid access. This helps limit execution risks. Based on current trends, about 80% of the capacity awarded in 2023 and 2024 is likely to be commissioned within the next three years.

Government efforts to strengthen transmission infrastructure will also help in ensuring the timely completion of these projects. While challenges remain, the overall risk to project completion appears low to moderate.