India’s energy storage sector is poised for a significant expansion in 2026, with battery energy storage system (BESS) capacity additions expected to increase nearly tenfold to around 5 GWh, up from 507 MWh in 2025, according to a market analysis released by the India Energy Storage Alliance (IESA).
The report said total commissioned energy storage capacity stood at 708 MWh by the end of 2025, highlighting a wide gap between projects tendered and those operational. IESA identified 2026 as a critical inflection point, marking the industry’s transition from large-scale tendering to on-ground execution.
IESA noted that nearly 60 GWh of projects are set to enter the implementation phase, following a record-breaking 2025 in which cumulative tendered capacity rose 84% year-on-year to 224 GWh. During 2025 alone, 69 tenders totaling 102 GWh were issued—almost matching the combined tender volume between 2018 and 2024.
“2026 will be the year when a number of projects enter the operational phase,” said Debmalya Sen, President of IESA. “All eyes will remain on whether the performance of these projects is in line with what was committed. Financing, especially for low-tariff projects, will be the next big challenge.”
The report highlighted sharp tariff compression as one of the most notable developments in 2025. Standalone two-hour BESS tariffs fell from INR 2.21 lakh per MW per month in early 2025 to INR 1.48 lakh per MW per month by the end of the year in APTRANSCO’s tender. Tariffs for solar-plus-four-hour BESS projects declined to INR 2.70–2.76 per kWh, with more than 50 new bidders entering the market.
However, the aggressive pricing has raised concerns over project viability. Sen noted that only a limited number of awarded projects have secured financing so far, adding that the fate of several low-tariff projects will remain uncertain until they are delivered.
A major milestone is expected in March 2026, when Adani is scheduled to commission a 1,126 MW/3,530 MWh BESS project in Gujarat, one of the world’s largest single-location installations. In January, Rajasthan is expected to issue a tender for India’s largest solar-plus-BESS project at the Pugal Solar Park. The commercial and industrial segment is also showing early momentum, following Juniper Green Energy’s commissioning of a 60 MWh merchant BESS project in December.
“The transition from tendering to execution in 2026 represents a watershed moment for India’s energy storage sector,” said Vinayak Walimbe, Managing Director of Customized Energy Solutions. He added that success will depend on operational execution, financing innovation, and supply chain resilience amid uncertainties in battery costs.
Government support remained a key enabler in 2025. The Centre approved a second tranche of Viability Gap Funding (VGF) worth INR 5,400 crore to support 30 GWh of standalone BESS capacity, with a requirement of 20% domestic value addition. Interstate Transmission System charge waivers were extended until 2028 for pumped storage and solar-plus-BESS projects. At the state level, Rajasthan mandated 5% energy storage for renewable projects above 5 MW, while Bihar announced plans to deploy 6.1 GWh of storage by 2030.
The pumped storage hydro segment also gained momentum, with the competitive bidding pipeline expanding to 132 GWh from 50 GWh in 2024. JSW and Uttar Pradesh Power Corporation Limited signed a 1.5 GW/12 GWh pumped hydro power purchase agreement at INR 77.2 lakh per MW per year.
Despite the strong pipeline, IESA flagged key risks ahead, including China’s tightening trade policies and export restrictions on battery materials, which could impact cost assumptions behind ultra-low tariffs. With battery prices showing limited decline in recent months, the direction of future cost trends could determine the viability of several projects.
IESA added that initiatives such as NTPC’s thermal-plus-BESS project could open new market segments, but with only 758.4 MWh of cumulative commissioned capacity so far, the sector still faces a substantial execution challenge as it moves into 2026.
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