India is expected to witness a significant increase in battery energy storage system (BESS) deployment, with 45-50 GWh of renewable energy-linked storage capacity likely to be commissioned during fiscals 2027 and 2028, according to an analysis by CRISIL Ratings.
The expected addition marks a substantial increase from the approximately 1 GWh of BESS capacity commissioned as of the last fiscal. The growth is supported by a strong project pipeline, government-led auctions, and increasing demand for firm and peak-hour renewable power.
However, around 8-9 GWh of awarded capacity faces a higher risk of delays, primarily due to rising battery prices, relatively competitive tariffs, and limited execution experience among some project developers.
The analysis covers BESS and renewable energy bids awarded between fiscals 2024 and 2026 across nearly 100 renewable energy developers.
BESS Deployment Gains Momentum
Renewable energy accounted for around 39% of India’s installed power generation capacity and approximately 15% of electricity generation in the last fiscal. The intermittent nature of renewable generation has increased the need for energy storage to provide firm power and address the mismatch between renewable generation and electricity demand.
The requirement is particularly significant for solar projects, as generation typically declines in the evening when electricity demand increases. BESS can store surplus electricity generated during periods of high solar output and discharge it during peak-demand periods.
Government-led storage-linked auctions have consequently increased. BESS-linked projects accounted for nearly 40% of total auctioned capacity in fiscal 2026, compared with around 5% in fiscals 2024 and 2025.
Around 50-55 GWh of BESS capacity is scheduled for commissioning across fiscals 2027 and 2028. Nearly 40 GWh of this capacity has been awarded through government-led auctions, with distribution utilities serving as the offtakers. The remaining 10-15 GWh is expected to cater to commercial and industrial consumers or the merchant market.
Battery Prices Create Pressure on Project Returns
According to CRISIL Ratings, nearly 21% of under-construction BESS capacity, equivalent to around 12 GWh, faces weak return potential, creating a risk of commissioning delays.
Manish Gupta, Senior Director and Deputy Chief Ratings Officer at CRISIL Ratings, said battery prices have increased in 2026 while tariffs for several projects were bid at relatively low levels.
Developers generally procure batteries around a year after securing project bids. As a result, projects awarded in 2025 are increasingly exposed to higher battery prices, following the decline witnessed through 2025.
The increase in battery costs could reduce project returns below developers’ typical target internal rate of return (IRR) of 12-14%. Developers could therefore defer implementation while awaiting more favourable battery prices.
Limited Execution Experience Adds to Delay Risk
CRISIL Ratings also identified limited implementation experience among developers as an additional risk for approximately 8-9 GWh of the 12 GWh of capacity facing weak returns.
Ankit Hakhu, Director at CRISIL Ratings, said BESS projects generally face fewer land acquisition and connectivity challenges than conventional renewable energy projects. However, equipment procurement remains a key execution risk because the sector continues to depend significantly on overseas suppliers for batteries and other critical components.
Developers with limited scale and procurement experience may face difficulties in securing equipment at competitive prices. Higher procurement costs combined with execution challenges could further pressure project returns and delay commissioning.
45-50 GWh Capacity Has Higher Commissioning Potential
Following the assessment of project-level risks, CRISIL Ratings expects the remaining 45-50 GWh of awarded BESS capacity to have a higher likelihood of being commissioned during fiscals 2027 and 2028.
Despite the positive long-term outlook, a large portion of the awarded capacity remains in the development stage or early construction phase. The sector also continues to rely heavily on overseas suppliers for batteries and other critical components.
CRISIL Ratings noted that while structural drivers are expected to support long-term battery demand in India, geopolitical developments and potential disruptions to global supply chains remain factors that could affect project execution and equipment availability.
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